A government imposes a specific indirect tax on a product.
When will the tax cause the greatest reduction in consumer surplus for the buyers of the product?
1 )
The product has price elastic demand and price elastic supply.
2 )
The product has price elastic demand and price inelastic supply.
The product has price inelastic demand and price elastic supply.
4 )
The product has price inelastic demand and price inelastic supply.
