Statement I: A perfectly inelastic supply curve and a perfectly inelastic demand curve are represented the same way on a graph.
Statement II: A tax increase will increase supply.
A)Statement I is true and statement II is false.
B)Statement II is true and statement I is false.
C)Both statements are true.
D)Both statements are false.

Question

Quizplus · Accepted Answer

Statement I is true because both perfectly inelastic supply and demand curves are represented as vertical lines on a graph, indicating that the quantity supplied or demanded does not change regardless of price changes. Statement II is false because a tax increase typically decreases supply by increasing the cost of production or selling, making suppliers less willing or able to supply the same quantity at a given price.

Statement I: a Perfectly Inelastic Supply Curve and a Perfectly