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2. (2 points) Suppose the local government places a sales tax on hotel rooms and that the demand for these rooms is elastic while the supply is perfectly inelastic. The tax incidence is such that the tax will be paid by A. only the consumers. B. equally by the consumers and the producers. C. only the producers. D. the taxpayers. 3. (2 points) Under which of the following situations would a subsidy on local telephone service benefit both producers and consumers? A. Demand for local telephone service is perfectly elastic. B. Supply of local telephone service is perfectly elastic. C. Demand for local telephone service is perfectly inelastic. D. In none of the above cases will subsidy incidence fall on both the producers and consumersis rival and is nonrival. O A. A seat on a bus at rush hour, national defense O B. A mile of freeway in rural Wyoming; cable TV O C. A TV concert; a public park O D. The Internet; a pizza