Using Figure 2 below, suppose that the economy started at PAE2. A potential change that could cause the economy to go from PAE2 to PAE1 might be:

Why do the owners of good-quality used cars stay away from the market for used cars?

What will be an ideal response?

The above figure shows the market for anti-freeze. The government imposes the sales tax shown in the figure on sellers. Automobile owners would pay a larger part of this tax than what is shown in the figure if the

A) demand were more elastic. B) demand were more inelastic. C) supply were more inelastic. D) None of the above because the buyers always pay the entire amount of the tax.