Consumers will always pay the entire amount of a specific tax whenever
A) demand is perfectly inelastic.
B) supply is perfectly elastic.
C) Both A and B above.
D) Either A or B above but not at the same time.

Question

Quizplus · Accepted Answer

When demand is perfectly inelastic, consumers will buy the same amount regardless of price changes, absorbing the full tax. When supply is perfectly elastic, producers can sell as much as they want at a certain price, so any tax is fully passed on to consumers.

Consumers Will Always Pay the Entire Amount of a Specific