Suppose that the demand for toilet paper is highly inelastic, and the supply of toilet paper is highly elastic. A tax of $0.10 per roll levied on toilet paper will decrease the effective price received by sellers of toilet paper by:

A $0.05.

B less than $0.05.

C $0.10.

D between $0.05 and $0.10.

B. less than $0.05.

Explanation:

As the supply is elastic the burden of tax will be borne more by the buyer rather than producer. Therefore, more than half the tax is borne by buyer and less than half the tax is borne by the supplier. Elasticity is a measure of a variable's sensitivity to a change in another variable. In business and economics, elasticity refers the degree to which individuals, consumers or producers change their demand or the amount supplied in response to price or income changes.