If the supply curve is perfectly elastic, the burden of a tax on suppliers is borne:
A) entirely by the suppliers.
B) entirely by the consumers.
C) mostly by the suppliers and partly by the consumers if the demand curve is inelastic.
D) partly by the suppliers and mostly by the consumers if the demand curve is elastic.

Question

Quizplus · Accepted Answer

When the supply curve is perfectly elastic, suppliers can sell any quantity at a given price, so they pass the entire tax burden onto consumers.

If the Supply Curve Is Perfectly Elastic, the Burden of a Tax