A tax is imposed on orange juice.Consumers will bear no burden from this tax if the:
A) demand for orange juice is perfectly inelastic.
B) demand for orange juice is unit elastic.
C) supply curve for orange juice is perfectly inelastic.
D) none of the above

Question

Quizplus · Accepted Answer

If the supply curve for orange juice is perfectly inelastic, it means that the quantity of orange juice supplied will remain the same regardless of the price. Therefore, the entire burden of the tax will fall on the producers and not be passed on to consumers in the form of higher prices. If the demand for orange juice is perfectly inelastic or unit elastic, then the burden of the tax will be partially or entirely passed on to consumers through higher prices.

A Tax Is Imposed on Orange Juice