Suppose the demand for barley is perfectly elastic.The supply curve of barley is upward sloping.If a tax is imposed on barley,
A) barley sellers pay the entire tax.
B) barley buyers pay the entire tax.
C) the government pays the entire tax.
D) the tax is split evenly between barley buyers and sellers.
E) who pays the tax depends on whether the government imposes the tax on barley sellers or on barley buyers.

Question

Quizplus · Accepted Answer

When demand is perfectly elastic, consumers will only pay a fixed price. Any tax imposed will be absorbed by sellers, as they cannot pass it on to consumers without losing all sales.

Suppose the Demand for Barley Is Perfectly Elastic