Assume the following holds true:

1. Price elasticity of supply of soap is high due to excess capacity (factories can increase output easily)

2. Soap is a necessity (we are not talking about a brand of soap, but soap in general).

If a per unit tax on soap were introduced, who would bear most of the burden?

a.

the government

b.

buyers and sellers equally

c.

buyers because demand is elastic

d.

sellers because supply is elastic

e.

buyers because demand is inelastic