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Suppose that the demand for soft drinks is price elastic and the supply is price inelastic. If the government imposes a sales tax on soft drinks, which of the following will occur in the short run? (A) The tax burden will fall equally on both consumers and producers. (B) The tax burden will fall more on producers. (C) The tax burden will fall more on consumers. (D) The percentage increase in the price of soft drinks will be greater than the percentage increase in the quantity demanded. (E) The percentage decrease in total revenue will be greater than the percentage decrease in the quantity demanded.

Suppose that the demand for soft drinks is price elastic and the supply is price inelastic. If the government imposes a sales tax on soft drinks, which of the following will occur in the short run? (A) The tax burden will fall equally on both consumers and producers. (B) The tax burden will fall more on producers. (C) The tax burden will fall more on consumers. (D) The percentage increase in the price of soft drinks will be greater than the percentage increase in the quantity demanded. (E) The percentage decrease in total revenue will be greater than the percentage decrease in the quantity demanded.

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Suppose that the demand for soft drinks is price elastic and the supply is price inelastic. If the government imposes a sales tax on soft drinks, which of the following will occur in the short run? (A) The tax burden will fall equally on both consumers and producers. (B) The tax burden will fall more on producers. (C) The tax burden will fall more on consumers. (D) The percentage increase in the price of soft drinks will be greater than the percentage increase in the quantity demanded. (E) The percentage decrease in total revenue will be greater than the percentage decrease in the quantity demanded.
Transcribed Image Text:Suppose that the demand for soft drinks is price elastic and the supply is price inelastic. If the government imposes a sales tax on soft drinks, which of the following will occur in the short run? (A) The tax burden will fall equally on both consumers and producers. (B) The tax burden will fall more on producers. (C) The tax burden will fall more on consumers. (D) The percentage increase in the price of soft drinks will be greater than the percentage increase in the quantity demanded. (E) The percentage decrease in total revenue will be greater than the percentage decrease in the quantity demanded.
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