If the government eliminates a tax on a good with a perfectly elastic supply, who benefits most?
A)buyers
B)sellers
C)buyers if the demand is also perfectly elastic, otherwise sellers
D)buyers if the demand is unit elastic, otherwise sellers
E)buyers and sellers benefit equally

Question

Quizplus · Accepted Answer

When supply is perfectly elastic, the entire tax burden falls on buyers. Therefore, eliminating the tax benefits buyers the most.

If the Government Eliminates a Tax on a Good with a Perfectly