Suppose elasticity of demand is 1, elasticity of supply is 2, and a 5 percent excise tax is levied on consumers. Which of the following changes will reduce the burden of the tax on consumers?
A. Elasticity of demand falls to 0.
B. Taxing authorities levy the tax on suppliers.
C. Nothing will change the burden of the tax.
D. Elasticity of demand rises to 2.
Answer: D
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