Suppose legislation is passed stating that a per unit tax of $.50 per gallon of gasoline must be paid by energy suppliers. Assuming demand for gasoline is more inelastic than supply of gasoline.  Will the tax discourage driving?  a. Not at all as the tax burden will be entirely on firms as it is required by law to pay it. b. Driving may decline but possibly only slightly as demand is inelastic. c. Driving will decline considerably regardless of how demand is inelastic. d. Driving may decline by a significant amount particularly if demand is perfectly inelastic.

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