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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?

A

Producer surplus will fall by more than consumer surplus.

B

Consumer surplus will fall by more than producer surplus.

C

Consumer and producer surplus will fall in equal amounts.

D

There's not enough information to tell.

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