If the demand curve for a good is horizontal,a tax is levied on this product is
A) split between the buyers and the sellers but not evenly so that either the buyer or the seller pays more.
B) split evenly between the buyers and the sellers.
C) paid entirely by buyers.
D) paid entirely by sellers.
E) not paid by either the buyers or the sellers.

Question

Quizplus · Accepted Answer

When the demand curve for a good is horizontal, it indicates perfectly elastic demand. In this scenario, any tax levied on the product is paid entirely by the sellers because they cannot pass any of the tax burden onto the buyers through higher prices without losing all their customers.

If the Demand Curve for a Good Is Horizontal,a Tax