If a good is in fixed supply, then the incidence of a tax
A)falls entirely on the consumers.
B)falls mostly on the producers and partly on consumers.
C)falls entirely on the producers.
D)depends on the elasticity of demand.
E)none of the above.

Question

Quizplus · Accepted Answer

If a good is in fixed supply, then the supply curve is perfectly inelastic, meaning that producers cannot adjust the quantity supplied in response to a change in price. Therefore, the entire burden of the tax falls on the producers, and consumers are not affected.

If a Good Is in Fixed Supply, Then the Incidence