Suppose that the supply of insulin is perfectly elastic and the demand for insulin perfectly inelastic. Then the result of an excise tax would be

Question

Quizplus · Accepted Answer

When the supply of a good is perfectly elastic and the demand is perfectly inelastic, the burden of the excise tax falls entirely on the consumer, resulting in no change in the quantity consumed. Therefore, the government would generate higher revenue without affecting the market equilibrium.

Suppose That the Supply of Insulin Is Perfectly Elastic and the Demand