For nuclear reactors, which have a highly inelastic supply and a downward-sloping demand curve:
A)producers will bear most of the burden of a tax.
B)producers will not bear much of the burden of a tax.
C)consumers and producers will split the burden of a tax in half.
D)consumers will not bear any of the burden of a tax.

Question

Quizplus · Accepted Answer

When supply is highly inelastic, it means producers cannot easily change the amount of product available in response to price changes. Therefore, if a tax is imposed, producers have limited ability to reduce production or pass the tax onto consumers by raising prices. As a result, producers will bear most of the burden of the tax.

For Nuclear Reactors, Which Have a Highly Inelastic Supply and a Downward-Sloping