The buyers pay all of a tax when the demand is
A) perfectly elastic.
B) more elastic than the supply.
C) more inelastic than the supply.
D) unit elastic.
E) perfectly inelastic.

Question

Quizplus · Accepted Answer

When the demand is perfectly inelastic, the buyers have no alternative but to pay the tax, regardless of its level. This means that the entire amount of the tax is absorbed by the buyers, making them pay all of the tax.

The Buyers Pay All of a Tax When the Demand