In which case would producers bear 100% of the tax incidence?
A) inelastic demand curve and unitary elastic supply curve
B) perfectly inelastic demand curve with elastic supply curve
C) perfectly elastic demand curve with inelastic supply curve
D) inelastic demand curve and perfectly elastic supply curve

Question

Quizplus · Accepted Answer

When the demand curve is perfectly elastic, consumers will not bear any of the tax burden because they will only pay the original price. Therefore, producers will bear 100% of the tax incidence if the supply curve is inelastic.

In Which Case Would Producers Bear 100% of the Tax