Consider these two conditions for market demand: 1

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Consider these two conditions for market demand:

1. In market 1, consumers are highly unresponsive to a change in the price of the good.

2. In market 2, consumers are highly responsive to a change in the price of the good.

Assume now that the same dollar excise tax is imposed on the good in both competitive markets. What will happen to the price in the two competitive markets?

a. The price in market 1 will rise while the price in market 2 will stay the same.

b. The price in market 1 will rise by less than that in market 2.

c. The price in market 1 will rise by more than that in market 2.

d. The price in market 2 will rise while the price in market 2 will fall.