Suppose that the demand for digital cameras is elastic,and the supply of digital cameras is inelastic.A tax of $20 per camera levied on digital cameras will decrease the effective price received by sellers of digital cameras by

Question

Quizplus · Accepted Answer

Since the demand for digital cameras is elastic, a $20 per camera tax will cause a decrease in the quantity demanded of digital cameras. However, since the supply of digital cameras is inelastic, the quantity supplied will not change significantly in response to the tax. As a result, the burden of the tax will be shared between buyers and sellers, and the effective price received by sellers will decrease by an amount between $10 and $20. Therefore, choice C is the best answer.

Suppose That the Demand for Digital Cameras Is Elastic,and the Supply