Suppose the equilibrium price of textbooks is $40 a textbook. At that price, the quantity of textbooks demanded and supplied is 20,000. If a $5 tax per textbook paid by consumers increases the price paid by consumers to $42 a textbook and reduces the equilibrium quantity sold to 18,000, elasticity of:
A) demand is 1.3 and elasticity of supply is 2.0. Consumers pay a larger portion of the tax.
B) demand is 0.7 and elasticity of supply is 0.5. Consumers pay a smaller portion of the tax.
C) supply is 1.3 and elasticity of demand is 2.0. Suppliers pay a larger portion of the tax.
D) supply is 0.7 and elasticity of demand is 0.5. Suppliers pay a smaller portion of the tax.

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The Answer of Suppose the equilibrium price of textbooks is $40 a textbook. At that price, the quantity of textbooks demanded and supplied is 20,000. If a $5 tax per textbook paid by consumers increases the price paid by consumers to $42 a textbook and reduces the equilibrium quantity sold to 18,000, elasticity of:
A) demand is 1.3 and elasticity of supply is 2.0. Consumers pay a larger portion of the tax.
B) demand is 0.7 and elasticity of supply is 0.5. Consumers pay a smaller portion of the tax.
C) supply is 1.3 and elasticity of demand is 2.0. Suppliers pay a larger portion of the tax.
D) supply is 0.7 and elasticity of demand is 0.5. Suppliers pay a smaller portion of the tax.

Suppose the Equilibrium Price of Textbooks Is $40 a Textbook