If the demand curve is downward-sloping and supply is perfectly elastic,then the burden of an excise tax is:

Question

Quizplus · Accepted Answer

When supply is perfectly elastic, any increase in price results in a decrease in quantity supplied as producers are willing and able to supply any amount at the same price. Therefore, the entire burden of the excise tax falls on consumers, who will demand less at the higher price. Producers will continue to supply the same amount at the same price, unaffected by the tax.

If the Demand Curve Is Downward-Sloping and Supply Is Perfectly