If demand is perfectly inelastic and supply is relatively elastic, the incidence of an excise tax
A) falls primarily on producers.
B) is shared evenly by consumers and producers.
C) falls entirely on producers.
D) falls entirely on consumers.

Question

Quizplus · Accepted Answer

When demand is perfectly inelastic, consumers are willing to pay any price for a product, meaning they will bear the entire burden of an excise tax, regardless of the elasticity of supply.

If Demand Is Perfectly Inelastic and Supply Is Relatively Elastic