Sellers bear the entire incidence of a tax on a good.This outcome can occur if

Question

Quizplus · Accepted Answer

When supply is perfectly inelastic, it means that no matter the increase in price, the quantity supplied will remain constant. In this situation, the entire incidence of the tax falls on the seller because they are unable to pass on any part of the tax to the consumer by increasing the price. Therefore, option A is the correct answer. The other options do not guarantee the complete incidence of the tax falling on the seller.

Sellers Bear the Entire Incidence of a Tax on a Good.This