B.2: Consider the supply and demand curves with particular slopes as indicated in the figure here, yielding an equilibrium price of $5. Price 1. Giventhe demand and supply curves drawn, which of the following is true? A. Ingeneral, the demand is more elastic (with respect to own price) than the supply. B. Ingeneral, the supply is more elastic (with respect to own price) than the demand. Answer: 2. Suppose the government is to impose a tax of $1 per unit on the transaction of the good. We don't 0 p Quantity know yet whom the government will impose the tax on. We do know that the tax will generate a $1 wedge between the net price consumers pay and the net price producers receive. Given the relative magnitude of the demand and supply elasticities, which of the following is the most likely price outcome under taxation? (Hint: Tuck it in!) A. Consumer net paying price = $6.00, producer net receiving price = $5.00 B. consumer net paying price = $5.00, producer net receiving price = $4.00 C. consumer net paying price = $5.80, producer net receiving price = $4.80 D. consumer net paying price = $5.20, producer net receiving price = $4.20 E. consumer net paying price = $5.50, producer net receiving price = $4.50 Answer: 3. What is the tax burden borne by the consumer? Answer: per unit What is the tax burden borne by the producer? Answer: per unit The bears less of the tax burden than the does, because the curve is relatively more elastic than the curve