The supply curve of new automobile is perfectly elastic. If a 10 percent excise tax is levied on automobiles and collected from manufactures, then in the long run, the other things being equal
A. The tax will be fully shifted to buyers of automobiles as the market equilibrium price of automobiles increases by 10 percent
B. The tax will be borne entirely by manufacturers and the net price they receive from selling each automobile will be 10 percent less because of the tax
C. The tax on each automobile will be shared by buyers and sellers of automobiles
D. it is not possible to forecast the impact of the tax on the market price of automobiles
Answer: A