If demand for a good is perfectly inelastic,then consumers will bear the entire burden of an excise tax imposed on that good.

Question

Quizplus · Accepted Answer

If demand for a good is perfectly inelastic, it means that consumers do not have many substitutes and are willing to pay any price for the good. Therefore, when an excise tax is imposed on the good, the price will increase and consumers will have to pay the higher price, as they have no other option. This means that the burden of the tax falls entirely on the consumers.

If Demand for a Good Is Perfectly Inelastic,then Consumers Will