If the demand curve for a good is unit price elastic and the supply curve is perfectly price elastic,a $1 specific tax imposed on the sellers of this good will
A) shift the supply curve up vertically by $1.
B) shift the demand curve down vertically by $1.
C) not raise price at all.
D) cause price to increase but by less than $1.

Question

Quizplus · Accepted Answer

When a specific tax is imposed on sellers, the supply curve shifts vertically upwards by the amount of the tax, in this case, $1. This is because the tax effectively increases the cost of supplying the good by $1 at every quantity, which is represented graphically by shifting the supply curve upwards.

If the Demand Curve for a Good Is Unit Price