If the tax on gasoline is increased, gas stations are most likely to pass most of this increase to the consumer if the demand is

Question

Quizplus · Accepted Answer

When demand is very inelastic, consumers are less sensitive to price changes, meaning they will continue to buy gasoline even if the price increases. Therefore, gas stations can pass most of the tax increase onto consumers without significantly reducing the quantity sold.

If the Tax on Gasoline Is Increased, Gas Stations Are