The price elasticity of demand is -1.5. The price elasticity of supply is 1.5. 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

Specific Tax

A fixed amount imposed by the government on a product, service, or activity.

Price Elasticity

A measure that shows how much the quantity demanded of a good responds to a change in the price of that good.

Tax Borne

Refers to the entity (consumers, producers, or others) that ultimately pays the economic cost of a tax, regardless of who the tax is initially levied upon.