Other things being equal, the burden of a sales tax on a product will be borne entirely by the producer if

Name: Other things being equal, the burden of a sales tax on a product will be borne entirely by the producer if
Brand: Quizplus
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Question

Quizplus · Accepted Answer

When demand is perfectly elastic, consumers are extremely sensitive to price changes and will not purchase the product if its price increases. Therefore, the producer must absorb the entire cost of the sales tax to maintain the price and keep consumers buying the product.

Other Things Being Equal, the Burden of a Sales Tax