If the supply of a product is perfectly elastic and demand is downsloping an

# If the supply of a product is perfectly elastic and

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90. If the supply of a product is perfectly elastic and demand is downsloping, an excise tax of \$2 per unit will increase price by:A. more than \$2.B. less than \$2.C. \$2 and increase equilibrium output.D. \$2 and reduce equilibrium output.Answer: DTopic: Tax incidence and efficiency lossLearning Objective: 19-03: Explain the principles relating to tax shifting, tax incidence, and the efficiency losses caused by taxes.Difficulty: 3 HardBloom’s: Level 4 Analyze AACSB: Reflective Thinking[Question] 91. Suppose that government imposes a specific excise tax on product X of \$2 per unit and that the price elasticity of demand for X is unitary (coefficient = 1). If the incidence of the tax is such that the producers of X pay \$1.75 of the tax and the consumers pay \$.25, we can conclude that the:
[Question] 92. Suppose that government imposes a specific excise tax on product X of \$2 per unit and that the price elasticity of demand for X is unitary (coefficient = 1). If the incidence of the tax is such that consumers pay \$1.80 of the tax and the producers pay \$.20, we can conclude that the:[Question] 93. Suppose that government imposes a specific excise tax on product X of \$2 per unit and that the price elasticity of supply of X is unitary (coefficient = 1). If the incidence of the tax is such that the producers of X pay \$1.90 of the tax and the consumers pay \$.10, we can conclude that the:[Question]
Chapter 019 Public Finance: Expenditures and Taxes