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

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Quizplus · Accepted Answer

In this scenario, the demand is perfectly inelastic, so consumers will not change their purchasing behavior in response to the tax. The burden of the tax will therefore fall entirely on producers, who will increase the price by the full amount of the tax to maintain their profit margins. So, the end result is that the price will increase by $1 per unit, as the tax is fully passed on to consumers.

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