If an excise tax is placed on a product that has a perfectly inelastic demand, then:
A) the entire tax will be paid by the consumer.
B) the entire tax will be paid by the producer.
C) the consumer and producer will each pay a share of the tax.
D) the incidence of the tax cannot be determined unless we know the coefficient of price elasticity of supply.
E) the tax is progressive.

Question

If an excise tax is placed on a product that has a perfectly inelastic demand, then:​
A) ​the entire tax will be paid by the consumer.
B) ​the entire tax will be paid by the producer.
C) ​the consumer and producer will each pay a share of the tax.
D) ​the incidence of the tax cannot be determined unless we know the coefficient of price elasticity of supply.
E) ​the tax is progressive.

Quizplus · Accepted Answer

The Answer of If an excise tax is placed on a product that has a perfectly inelastic demand, then:​
A) ​the entire tax will be paid by the consumer.
B) ​the entire tax will be paid by the producer.
C) ​the consumer and producer will each pay a share of the tax.
D) ​the incidence of the tax cannot be determined unless we know the coefficient of price elasticity of supply.
E) ​the tax is progressive.

If an Excise Tax Is Placed on a Product That