The government proposes a tax on flowers in order to boost its revenue. Under what circumstances will consumers bear all of this tax?
A) when the demand for flowers is perfectly elastic
B) when the demand for flowers is perfectly inelastic
C) when the supply of flowers is unit elastic
D) when the supply of flowers is perfectly inelastic

Question

Quizplus · Accepted Answer

When the demand for flowers is perfectly inelastic, it means that consumers are willing to pay any price for flowers and will not reduce their consumption regardless of the increase in price due to the tax. Therefore, the entire burden of the tax will be borne by consumers.

The Government Proposes a Tax on Flowers in Order to Boost