Multiple Choice
Consider the market for heart transplants. The demand for a heart transplant is perfectly inelastic and the supply curve is upward sloping. If a $1,000 tax per transplant tax is imposed on buyers (the recipients) , how will the tax be divided between the buyer and seller?
A) The sellers will pay the entire tax.
B) The buyers will pay the entire tax.
C) The tax will be evenly divided between the sellers and buyers.
D) More information is needed to determine how the tax is split.
Correct Answer:
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