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Suppose the supply for toothpicks is perfectly elastic. After imposing a tax, producer surplus _________ and supplier revenue _________.

Suppose the supply for toothpicks is perfectly elastic. After imposing a tax, producer surplus _________ and supplier revenue _________.


  1. increases; decreases
  2. decreases; decreases
  3. decreases; stays constant
  4. stays constant; stays constant
  5. stays constant; decreases

Top Answer

5) After imposing a tax, producer surplus stays constant and supplier revenue decreases . Price elasticity of supply is... View the full answer

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Answer is option 2 An excise tax drives a wedge equal to the amount of the tax between the price received by... View the full answer

1 comment
  • Turns out it's #5 -- stays constant; decreases. Thanks anyway.
    • sisnaz
    • Apr 05, 2018 at 2:56pm

The answer is... View the full answer

1 comment
  • Turns out it's #5 -- stays constant; decreases. Thanks anyway.
    • sisnaz
    • Apr 05, 2018 at 2:57pm

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