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

Name: If the government institutes a specific tax for a good that has a perfectly elastic demand curve
Brand: Quizplus
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Question

Quizplus · Accepted Answer

If the demand for a good is perfectly elastic, any increase in price will cause consumers to completely stop buying the good, so the producer cannot pass on the tax to the consumer without losing all of their sales. Therefore, the producer must absorb the entire tax themselves.

If the Government Institutes a Specific Tax for a Good