Suppose that in a market, supply is perfectly elastic while ...

[codyclark]

Suppose that in a market, supply is perfectly elastic while demand is perfectly inelastic.  If the government imposes a tax of $10 per unit,
◦ the price buyers pay increases by less than $10 per unit with firms and buyers splitting the tax.
◦ the price buyers pay is unaffected by the tax.
◦ the market quantity is unaffected by the tax.
◦ at the new equilibrium, marginal cost equals marginal benefit and there is no deadweight loss.
◦ both the market quantity is unaffected by the tax and at the new equilibrium, marginal cost equals marginal benefit and there is no deadweight loss are correct.

[firehawk60]

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[codyclark]

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[firehawk60]

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