Consider an excise tax imposed on daily parking charges in the downtown of a small city.Before the imposition of the tax,equilibrium price and quantity are $15 and 100 cars parked.(P = $15,Q = 100).The city government imposes a tax of $3 per car parked per day.Market equilibrium adjusts to P = $18 and Q = 100.Which of the following statements about the burden of the tax is correct?
A)Price elasticity of supply is 0 and therefore the entire burden of the tax falls on the consumer.
B)Elasticity of demand is 0 and therefore the entire burden of the tax falls on the consumer.
C)Elasticity of supply is 1 and therefore the entire burden of the tax falls on the seller.
D)Price elasticity of demand is 1 and therefore the entire burden of the tax falls on the seller
E)The burden of the tax is shared equally by the seller and the consumer.

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The Answer of Consider an excise tax imposed on daily parking charges in the downtown of a small city.Before the imposition of the tax,equilibrium price and quantity are $15 and 100 cars parked.(P = $15,Q = 100).The city government imposes a tax of $3 per car parked per day.Market equilibrium adjusts to P = $18 and Q = 100.Which of the following statements about the burden of the tax is correct?
A)Price elasticity of supply is 0 and therefore the entire burden of the tax falls on the consumer.
B)Elasticity of demand is 0 and therefore the entire burden of the tax falls on the consumer.
C)Elasticity of supply is 1 and therefore the entire burden of the tax falls on the seller.
D)Price elasticity of demand is 1 and therefore the entire burden of the tax falls on the seller
E)The burden of the tax is shared equally by the seller and the consumer.

Consider an Excise Tax Imposed on Daily Parking Charges in the Downtown