When demand is perfectly elastic the buyer pays _____ of a tax.
A)all
B)most
C)half
D)less than half
E)none

Question

Quizplus · Accepted Answer

When demand is perfectly elastic, the slightest increase in price would cause the buyers to switch to a substitute product, resulting in zero demand for the original product. Therefore, the buyer would not pay any of the tax as they have the power to completely avoid the product due to the availability of perfect substitutes.

When Demand Is Perfectly Elastic the Buyer Pays _____ of a Tax