If the demand curve for a product is vertical, any tax increase on the product is paid for entirely by the consumer.

Question

Quizplus · Accepted Answer

When the demand curve is vertical, it means that consumers are willing to pay any price for the product, and there is no change in the quantity demanded even when the price increases. Therefore, the entire burden of the tax falls on the consumer. The seller can continue to charge the same price, and the consumer will have to bear the additional tax expense.

If the Demand Curve for a Product Is Vertical, Any