Specific tax shifts supply curve, increasing its elasticity

Steps:

• Diagram implies original supply curve is inelastic (e<1), steep slope.
• $5 specific tax shifts supply upward by$5, parallel to original.
• New curve retains same slope (dQ/dP constant).
• At equilibrium, higher price P and lower quantity Q raise P/Q ratio.

Why D is correct:

• Price elasticity of supply formula Pes = (dQ/dP) × (P/Q); reduced Q increases P/Q, raising Pes from <1 to >1.

Why the others are wrong:

• A: Elasticity rises, not falls.
• B: No shift to unitary (e=1); increase is general.
• C: Original supply is inelastic, not unitary.

Final answer: D