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Because the Supply of Land Is Perfectly Inelastic, When Governments

Question 71

Multiple Choice

Because the supply of land is perfectly inelastic, when governments tax land, the tax


A) creates no deadweight loss because the equilibrium quantity is the same as without the tax.
B) decreases both the demand for and the supply of land.
C) increases the supply of land because the landlord pays all of the tax.
D) decreases the supply of land because the landlord pays all of the tax.
E) creates a deadweight loss because the supply is fixed.

Correct Answer:

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