If the government levies an excise tax in a market whose demand curve is perfectly inelastic,the burden of the tax will fall completely on the _____,and the deadweight loss will equal _____.

Question

Quizplus · Accepted Answer

In a market with perfectly inelastic demand, consumers are willing to pay any price for a good or service, meaning they will bear the full burden of an excise tax. Since the quantity demanded does not change, there is no deadweight loss, as the market efficiency remains unchanged.

If the Government Levies an Excise Tax in a Market