Assume that the supply of gasoline is relatively inelastic and the supply of wheat is relatively elastic.What happens to the producer surplus if a tax is levied on gasoline
A)The loss of producer surplus is relatively large for gasoline.
B)The loss of producer surplus is relatively small for gasoline.
C)The gain of producer surplus is relatively large for gasoline.
D)The gain of producer surplus is relatively small for gasoline.

Question

Quizplus · Accepted Answer

The supply of gasoline is relatively inelastic, which means that a tax will cause a relatively large decrease in the quantity supplied. This will lead to a relatively large loss of producer surplus for gasoline.

Assume That the Supply of Gasoline Is Relatively Inelastic and the Supply