Suppose the market demand curve is perfectly elastic in an increasing-

Suppose the market demand curve is perfectly elastic in an increasing-cost industry. If an output tax of t per unit is imposed on all producers of the good, what happens to the market equilibrium outcome?

A) The price paid by buyers increases and output declines
B) The price paid by buyers does not change and output decrease
C) The price paid by buyers and output increase
D) The price paid by buyers and output decrease

ANSWER

B