Suppose someone believes that if a per-unit tax is placed on the producers of good Y, the consumers of good Y will end up paying the full tax. This person assumes that the demand curve for good Y is
A)elastic.
B)perfectly inelastic.
C)inelastic.
D)perfectly elastic.
E)unit elastic.

Question

Quizplus · Accepted Answer

If the demand curve for good Y is perfectly inelastic, consumers are completely unresponsive to price changes, meaning they will continue to buy the same quantity regardless of any price increase. Therefore, if a per-unit tax is placed on producers, the full tax can be passed on to consumers without reducing the quantity demanded.

Suppose Someone Believes That If a Per-Unit Tax Is Placed