The government of Healthyland imposes a tax on sellers of salt. The tax is $1.00 per kilogram. With no tax, the price of salt is $4.00 per kilogram. The demand for salt is perfectly inelastic and the elasticity of supply is 1.5. With the tax, the price that sellers of salt in Healthyland receive and keep is
A) $5.00 per kilogram.
B) $4.50 per kilogram.
C) $4.00 per kilogram.
D) $3.50 per kilogram.
Correct Answer:
Verified
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