Multiple Choice
The elasticity of demand for chocolate chip cookies is 0.6 and the elasticity of supply for these cookies is 1.9. If a tax is imposed on purchases of chocolate chip cookies, then the
A) consumers would pay more of the tax.
B) producers would pay more of the tax.
C) tax would be equally shared by the consumers and the producers.
D) consumers would pay the entire tax because their demand is less elastic than the producers' supply.
Correct Answer:
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