Assuming that the government imposes an excise tax on cigarettes equal to $1 per pack and the the demand curve fo this good is perfectly inelastic. The price per pack of cigarettes will:

Question

Quizplus · Accepted Answer

When demand is perfectly inelastic, consumers will bear the full burden of the tax, resulting in the price increasing by the full amount of the tax, which is $1.

Assuming That the Government Imposes an Excise Tax on Cigarettes