Most studies show that the price elasticity of demand for gasoline is -0.2. If the price elasticity of supply is 2, then a tax on gasoline will:
A) have no effect on the market equilibrium price of gasoline.
B) cause the market equilibrium price of gasoline to fall.
C) cause the market equilibrium price paid by buyers to rise.
D) cause the net price received by sellers to fall.
E) both c and d
Correct Answer:
Verified
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