What is the error in the following argument? "An increased sales tax on gasoline won't reduce consumption, because while the higher price will at first reduce demand, the reduced demand will eventually bring the price back down again, and consumption will return to its former level."
a. The ultimate effect on consumption may be to increase it beyond its original level.
b. the tax-induced price increase will necessarily be greater than the price reduction due to the lower demand, because demand is never perfectly inelastic.
c. A reduced demand does not cause lower prices.
d. The tax-induced price increase may be greater than the price reduction due to the lower demand.
e. A higher price doesn't reduce demand.
Is it (C)