Suppose the market for grass seed is expressed as
Demand: QD = 100 - 2p
Supply: QS = 3p
Price elasticity of supply is constant at 1. If the supply curve is changed to Q = 8p, price elasticity of supply is still constant at 1. Yet, with the new supply curve, consumers pay a larger share of a specific tax. Why?
Even though the elasticity of supply has not changed, the new supply curve intersects the old demand curve at a lower price where demand is relatively less elastic than at the higher price. Since the incidence of a specific tax on consumers is n/(n - e), where n is the price elasticity of supply and e is the price elasticity of demand, therefore when e increases (less elastic demand), the consumers' tax incidence is higher.
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Which of the following does not result in a change in the demand for Mexican pesos?
a. changes in the supply curve of pesos on the foreign exchange market b. changes in U.S. income c. changes in U.S. tariff policy d. appreciation of the dollar e. devaluation of the peso
Consider the monopoly in the figure below with price regulated at $2 per unit. The regulated price will result in a: 
A. surplus of 2 units. B. surplus of 5 units. C. shortage of 2 units. D. shortage of 5 units.