An increased government excise tax on liquor will NOT affect liquor consumption if:
A)the demand for liquor is perfectly elastic.
B)consumer tastes change.
C)the demand for liquor is perfectly inelastic.
D)liquor production becomes more expensive.
E)the supply of liquor is perfectly elastic.

Question

Quizplus · Accepted Answer

If the demand for liquor is perfectly inelastic, it means that consumers are willing to pay any price for liquor regardless of its cost. Therefore, an increase in government excise tax on liquor will not affect liquor consumption as consumers will continue to purchase the same quantity of liquor regardless of the tax increase.

An Increased Government Excise Tax on Liquor Will NOT Affect