Suppose that the demand for soft drinks is priceelastic and the supply is price inelastic. If thegovernment imposes a sales tax on soft drinks,which of the following will occur in the short run?(A) The tax burden will fall equally on bothconsumers and producers.(B) The tax burden will fall more on producers.(C) The tax burden will fall more on consumers.(D) The percentage increase in the price of softdrinks will be greater than the percentageincrease in the quantity demanded.(E) The percentage decrease in total revenue willbe greater than the percentage decrease inthe quantity demanded.

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Answered: Suppose that the demand for soft drinks…

Microeconomics: Principles & Policy

14th Edition

ISBN:9781337794992

Author:William J. Baumol, Alan S. Blinder, John L. Solow

Publisher:William J. Baumol, Alan S. Blinder, John L. Solow

Chapter6: Demand And Elasticity

Section: Chapter Questions

Problem 3TY

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