If the demand for a product is perfectly inelastic and the supply curve is upsloping,the imposition of a $1 excise tax per unit of output will:

Question

Quizplus · Accepted Answer

If the demand for a product is perfectly inelastic, it means that the buyers are willing to pay the same price regardless of the quantity supplied. Therefore, the full incidence of the tax will be passed onto the buyers, raising the price as seen by them by the full amount of the tax, which in this case is $1. The fact that the supply curve is upsloping does not affect this result since the demand is perfectly inelastic.

If the Demand for a Product Is Perfectly Inelastic and the Supply