If the demand curve is perfectly inelastic,_____.
A)suppliers will bear the entire burden of any tax
B)demanders will bear the entire burden of any tax
C)suppliers and demanders will split the burden of any tax
D)the actual burden of the tax depends upon who is legally required to pay the tax

Question

Quizplus · Accepted Answer

Perfectly inelastic demand means that the quantity demanded stays the same regardless of changes in price. Therefore, demanders have no choice but to pay the same price, and any taxes imposed on the good will be passed on entirely to the demanders in the form of higher prices. Thus, demanders will bear the entire burden of any tax.

If the Demand Curve Is Perfectly Inelastic,_____