1. A $1-per-gallon tax on the sale of gasoline will raise the price by $1 per gallon if
(a) the supply is perfectly inelastic.
(b) the demand is unit elastic.
(c) the demand is perfectly elastic.
(d) the supply is perfectly elastic.
2. The above graph shows the demand and supply curves for beer. The current market price is $4 per six pack, and 10 million six packs are sold per year. A new tax of $1 per six pack is levied, which shifts the supply curve upward by $1 for each possible quantity. As a result of the tax,
(a) the price of beer will rise by an amount less than $1, but there will be no effect on the quantity of beer demanded.
(b) the price of beer will rise by $1, but there will be no effect on the quantity of beer demanded.
(c) the market price of a six pack will rise by an amount less than $1.
(d) the market price of a six pack will rise by $1.
(e) there will be no affect on either price or the quantity of beer demanded.
(a) the supply is perfectly inelastic.
(b) the demand is unit elastic.
(c) the demand is perfectly elastic.
(d) the supply is perfectly elastic.
2. The above graph shows the demand and supply curves for beer. The current market price is $4 per six pack, and 10 million six packs are sold per year. A new tax of $1 per six pack is levied, which shifts the supply curve upward by $1 for each possible quantity. As a result of the tax,
(a) the price of beer will rise by an amount less than $1, but there will be no effect on the quantity of beer demanded.
(b) the price of beer will rise by $1, but there will be no effect on the quantity of beer demanded.
(c) the market price of a six pack will rise by an amount less than $1.
(d) the market price of a six pack will rise by $1.
(e) there will be no affect on either price or the quantity of beer demanded.