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Why Do Suppliers Pay All of a Tax When Supply

Question 46

Multiple Choice

Why do suppliers pay all of a tax when supply is perfectly inelastic?


A) because a perfectly inelastic supply means that the demand is elastic
B) because the government requires firms to collect the tax
C) because a perfectly inelastic supply means that the quantity supplied is quite sensitive to a change in price
D) because a perfectly inelastic supply means that suppliers will produce the same amount regardless of the price
E) because in this case the price of the good that suppliers receive and keep does not change

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