Figure 18-3
-In which panel of Figure 18-3 would an excise tax be borne entirely by the consumer?
A)1
B)2
C)3

Name: Figure 18-3 -In which panel of Figure 18-3 would an excise tax be borne entirely by the consumer? A)1 B)2 C)3
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Question

Figure 18-3 
-In which panel of Figure 18-3 would an excise tax be borne entirely by the consumer?
A)1 
B)2 
C)3

Quizplus · Accepted Answer

In panel 1, the demand curve is perfectly inelastic, meaning consumers' quantity demanded does not change with price changes. Therefore, consumers bear the entire burden of an excise tax, as their demand does not decrease in response to the price increase caused by the tax.

Figure 18-3 -In Which Panel of Figure 18-3 Would an Excise Tax