The demand curve for pizza in Perilia is vertical.If a tax is imposed on each pizza bought,________.

Question

Quizplus · Accepted Answer

When the demand curve is vertical, it means that consumers are not sensitive to changes in price, and therefore, the quantity demanded remains constant regardless of the price. In this case, the burden of the tax falls entirely on the buyers since they will have to pay the same price for pizza regardless of the tax. The sellers can simply pass on the cost of the tax to the buyers, and the quantity sold remains the same. Therefore, the tax does not affect the quantity demanded, and the burden falls entirely on the buyers. Option B, C and D are incorrect as explained above.

The Demand Curve for Pizza in Perilia Is Vertical