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If the Elasticity of Demand for a Product Equals 3

Question 48

Multiple Choice

If the elasticity of demand for a product equals 3 and the supply is perfectly elastic,then if a tax is imposed on this product,


A) the buyer pays all the tax.
B) the seller pays all the tax.
C) the buyer pays 3/4 of the tax.
D) the seller pays 3/4 of the tax.
E) the buyer pays 4/3 of the tax.

Correct Answer:

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