41. The Government decides that it is time to reduce air pollution by reducing the usage of gasoline. They impose a 1000 VND tax on each liter of gasoline sold. a.Should they impose this tax on producers or consumers? Explain carefully using a supply-and-demand diagram. b.If the demand for gasoline were more elastic, would this tax be more effective or less effective in reducing the quantity of gasoline consumed? Illustrate your answers with a diagram.

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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41. The Government decides that it is time to reduce air pollution by reducing the usage of gasoline. They impose a 1000 VND tax on each liter of gasoline sold.

a.Should they impose this tax on producers or consumers? Explain carefully using a supply-and-demand diagram.

b.If the demand for gasoline were more elastic, would this tax be more effective or less effective in reducing the quantity of gasoline consumed? Illustrate your answers with a diagram.

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