The government of Healthyland imposes a tax on sellers of salt. The tax is $0.10 per pound. With no tax, the market price of salt is $0.40 per pound. The demand for salt is perfectly inelastic, and the elasticity of supply is 1.5
With the tax, the price that sellers of salt in Healthyland receive and keep is A) $0.40 per pound.
B) $0.35 per pound.
C) $0.45 per pound.
D) $0.50 per pound.
A
You might also like to view...
An increase in interest rates
A) increases the value of the dollar, net exports, and equilibrium output. B) increases the value of the dollar, reducing net exports and equilibrium output. C) reduces the value of the dollar, net exports, and equilibrium output. D) reduces the value of the dollar, increasing net exports and equilibrium output.
The certainty effect shows that
A) people are overconfident about their choices. B) people prefer certain outcomes to uncertain outcomes even when the expected value of the uncertain outcome is lower. C) people prefer certain outcomes to uncertain outcomes even when the expected value of the uncertain outcome is higher. D) people prefer certain outcomes to uncertain outcomes even when the expected values are the same.