If the government institutes a specific tax for a good that has a perfectly inelastic demand curve

Question

Quizplus · Accepted Answer

When there is a perfectly inelastic demand curve, it means that consumers are willing to pay any price for the good, and therefore, the producer can pass the entire tax on to the consumer without them reducing their demand. This is because the quantity demanded will not decrease due to the tax, and the producer does not have to absorb any of the cost.

If the Government Institutes a Specific Tax for a Good