Figure 6-11. On the graph below, the shift of the supply curve from S₁ to S₂ represents the imposition of a tax on a good. On the axes, Q represents the quantity of the good and P represents the price.

-Consider Figure 6-11.Suppose the demand curve is not the one drawn on the graph;instead,the demand curve is a vertical line passing through the point (Q = 10,P = 5).Using the two supply curves that are drawn,which of the following statements would describe the effects of the tax correctly?

Question

Figure 6-11. On the graph below, the shift of the supply curve from S₁ to S₂ represents the imposition of a tax on a good. On the axes, Q represents the quantity of the good and P represents the price.
 
-Consider Figure 6-11.Suppose the demand curve is not the one drawn on the graph;instead,the demand curve is a vertical line passing through the point (Q = 10,P = 5).Using the two supply curves that are drawn,which of the following statements would describe the effects of the tax correctly?

Quizplus · Accepted Answer

When the demand curve is perfectly inelastic (vertical), buyers bear the entire burden of the tax because they are willing to pay any price for the same quantity.