Suppose the market supply curve for some good is upward sloping. If the imposition of an excise tax causes no change in the equilibrium quantity sold in the market, the good's demand curve must be , meaning that the burden of the tax has fallen completely on the .
A) unit elastic; government
B) vertical; firms
C) horizontal; consumers
D) horizontal; firms
E) vertical; consumers

Question

Quizplus · Accepted Answer

If the imposition of an excise tax causes no change in the equilibrium quantity sold in the market, it means that the demand for the good is perfectly inelastic (or vertical). This implies that consumers are willing to pay the same price for the good regardless of the tax. Therefore, the entire burden of the tax falls on the consumers who cannot shift the tax burden to firms.

Suppose the Market Supply Curve for Some Good Is Upward