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Demand for garbage collection is relatively inelastic. That is, people will buy a similar amount of trash pickup no matter what it costs. Supply, on the other hand, is more elastic than demand.

If the government imposes a tax on garbage collection, which is likely to occur?


Producer surplus will fall by more than consumer surplus.


Consumer surplus will fall by more than producer surplus.


Consumer and producer surplus will fall in equal amounts.


There's not enough information to tell.

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