Buyers bear all the economic burden of a tax if the demand curve is _____, given an upward sloping supply curve.

Question

Quizplus · Accepted Answer

If the demand curve is perfectly inelastic, it means that buyers are not responsive to changes in price and will continue to purchase the same quantity at any price. Thus, if a tax is imposed on the product, the buyers will bear the entire burden of the tax and the price will increase but the quantity demanded will remain the same.

Buyers Bear All the Economic Burden of a Tax If