Suppose the market supply curve for some good is upward sloping.If the imposition of an excise tax causes no change in the equilibrium quantity sold in the market,the good's demand curve must be ________,meaning that the burden of the tax has fallen completely on the ________.
A)vertical; firms
B)vertical; consumers
C)horizontal; firms
D)horizontal; consumers
E)unit elastic; government

Question

Quizplus · Accepted Answer

If the imposition of an excise tax causes no change in the equilibrium quantity sold in the market, it means that the supply curve is completely elastic (horizontal). This can only occur if the demand curve is perfectly inelastic (vertical). In this case, the burden of the tax falls entirely on consumers since the price they pay for the good increases while the quantity they purchase remains the same. Therefore, the answer is B, vertical demand curve, and consumers bear the full burden of the tax.

Suppose the Market Supply Curve for Some Good Is Upward