The above figure plots average retail gasoline prices and gas tax rates in dollars per
gallon for eight countries. Consider the following two statements and then choose the
best answer.
(1) It is evidence that consumers, not producers, bear the primary burden of gas
taxes.
(2) It is consistent with what economic theory predicts will happen to the price
consumers pay when a country imposes a tax and the supply of gasoline to the
country is perfectly elastic.
a) Only (1) is true.
b) Only (2) is true.
c) (1) and (2) are both true.
d) (1) and (2) are both false.