Question

Figure 6-24 Suppose the government imposes a $2 on this market. Price 10 S1 S2 D2 D1 1 2 3 4 5 6 789 Luaxtit Refer to Figure 6-24. Suppose D1 represents the demand curve for gasoline in both the short run and long run, S1 represents the supply curve for gasoline in the short run, and S2 represents the supply curve for gasoline in the long run. After the imposition of the $2, the price paid by buyers will be higher in the long run than in the short run. higher in the short run than in the long run. equivalent in the short run and the long run. unable to be determined without additional information.

Refer to Figure 6-24. Suppose D1 represents the demand curve for gasoline in both the short run and long run, S1 represents the supply curve for gasoline in the short run, and S2 represents the supply curve for gasoline in the long run. After the imposition of the $2, the price paid by buyers will be

Answer 1

higher in the long run than in the short run.

(Long run supply curve S2 is more elastic than long run demand curve D1 and buyer's burden is directly proportional to elasticity of supply. So, the price paid by buyers will be more in long run due to high elasticity of supply)