Supply and demand curves

Supply and demand curves - excise tax

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Reference no: EM1374557

The government levies an excise tax of five cents per unit sold on sellers in a competitive industry. Supply and demand curves have some elasticity with respect to value. This tax means that the:
A) supply curve shifts to the left by 5 cents, but (unless demand is perfectly elastic) price will not rise.
B) supply curve shifts to the left by less than 5 cents, but (unless demand is highly elastic) price will rise by the full five cents.
C) supply curve shifts to the left by less than 5 cents, but (unless demand is highly inelastic) price will rise by more than 5 cents.
D) supply curve shifts to the left by 5 cents, but (unless supply is perfectly elastic) any price rise will be less than 5 cents.
E) demand curve shifts to the right by 5 cents, and price will rise by 5 cents.

Reference no: EM1374557

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