If demand for a product is perfectly inelastic, a tax of $1 per unit imposed on sellers will
A)not affect the market price of the product.
B)cause the market price to rise by $1 per unit.
C)cause the market price to decline by $1 per unit.
D)cause the market price to rise by less than $1 per unit.

Question

Quizplus · Accepted Answer

When demand is perfectly inelastic, consumers will pay any price for the product. Therefore, a $1 tax on sellers will be fully passed on to consumers, raising the market price by $1 per unit.

If Demand for a Product Is Perfectly Inelastic, a Tax