Question

Consider a competitive market:
Suppose per unit commodity tax is imposed on the sellers,
A. a tax on the commodity creates a wedge between the price the buyers pay and the price which sellers receive.
B. post tax equilibrium quantity increases.
C. if the supply is more elastic than demand then the tax burden falls more heavily on buyers.
D. if the demand is more elastic than supply then the tax burden falls more heavily on buyers.
E. imposition of the tax creates dead weight loss.
Choose the most appropriate answer from the options given below:

• A. A and C only
• B. C and E only
• C. A, C, E only
• D. B and E only

Answer 1

Answer: (C)

A, C, E only

Answer 2

The correct answer is (C) : A, C, E only.