Assume the supply curve for product X is perfectly elastic and that government imposes a $2- per-unit excise tax. We can conclude that the resulting:
A. increase in output will be greater the less elastic the demand curve.
B. decrease in output will be greater the less elastic the demand curve.
C. decrease in output will be greater the more elastic the demand curve.
D. increase in output will be greater the more elastic the demand curve.
Answer: C
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