Refer to the information provided in Figure 5.7 below to answer the question(s) that follow. Figure 5.7
The above figure represents the market for pumpkins both before and after the imposition of an excise tax, which is represented by the shift of the supply curve.
-Refer to Figure 5.7. Had the demand for pumpkins been perfectly inelastic at Point A, the amount customers would have paid per pumpkin after the imposition of this tax would have been
A) $0.
B) $5.50.
C) $7.25.
D) $8.50.

Question

Refer to the information provided in Figure 5.7 below to answer the question(s) that follow.  Figure 5.7
The above figure represents the market for pumpkins both before and after the imposition of an excise tax, which is represented by the shift of the supply curve.
-Refer to Figure 5.7. Had the demand for pumpkins been perfectly inelastic at Point A, the amount customers would have paid per pumpkin after the imposition of this tax would have been
A) $0. 
B) $5.50. 
C) $7.25. 
D) $8.50.

Quizplus · Accepted Answer

With perfectly inelastic demand, consumers bear the full burden of the tax, meaning they would pay the original price plus the entire tax amount. If the original price at Point A plus the tax equals $8.50, that's the amount customers would pay per pumpkin.

Refer to the Information Provided in Figure 5