The quantity supplied of land is constant regardless of price. Suppose a tax is imposed on the rental price of land. Who will pay the greater share of such a tax?
A)The buyers will pay the entire share.
B)The sellers will pay the entire share.
C)The buyers and the sellers will pay equal shares.
D)The buyers will bear the greater share of the tax.

Question

Quizplus · Accepted Answer

Since the supply of land is perfectly inelastic (quantity supplied does not change with price), the sellers (landowners) cannot pass the tax onto buyers through higher prices. Therefore, the sellers will bear the entire burden of the tax.

The Quantity Supplied of Land Is Constant Regardless of Price