Consider a good whose own price elasticity of demand is -1.5 and price elasticity of supply is 0.5. The fraction of a specific tax that is borne by producers is:

A) 0
B) 0.25
C) 0.5
D) 0.75
E) 1

Own Price Elasticity

A measure of how much the quantity demanded of a good responds to a change in the price of that good, holding all else constant.

Specific Tax

A tax that is levied as a fixed amount per unit of a good or service, rather than a percentage of the price.

Elasticity of Supply

A measure of how much the quantity supplied of a good responds to a change in the price of that good, indicating the flexibility of producers.