If the demand curve for a product is vertical, then
A)consumers will refuse to bear any share of tax burden.
B)producers will bear the larger share of the tax burden.
C)consumers will bear the entire tax burden.
D)producers and consumers will equally share the tax burden.

Question

Quizplus · Accepted Answer

A vertical demand curve means that the quantity demanded does not change based on the price, so consumers will not change their behavior and continue to buy the same amount of the product. Therefore, if a tax is added to the price of the product, consumers will have to pay the higher price and bear the entire tax burden. Producers will not be able to pass on any of the tax to consumers because the quantity demanded will remain the same.

If the Demand Curve for a Product Is Vertical, Then