i2 the supy cu ve fer o goed is as falors At prites helow 30

i2: the supy cu ve fer o goed is as falors At prites helow $30. none ul be exoetly Coo uns w b upplies The inverse demand curve ist (000--Q4 fron sellers at this good, in the Coetive lrin with the Sales fa, demander hoits will be the smne as th vere wahout the Sak ey seleuf one: a. true b Fale

Solution

(a) True.

When quantity supplied is fixed at 500 units, it means that supply curve is vertical, meaning supply is perfectly inelastic. But demand curve equation means that demand is downward sloping, so demand curve is elastic. When demand is elastic and supply is inelastic, entire tax burden will be borne by the producer, and consumer (demander) price will remain unchanged. Assuming costs are the same, consumer (demander) profit will remain unchanged.