If the market supply curve is perfectly elastic and an excise tax is imposed,
A)all of the tax is paid by buyers
B)all of the tax is paid by sellers
C)the tax burden is divided equally between buyers and sellers
D)the market price will not change
E)the market price will fall by the amount of the tax

Question

Quizplus · Accepted Answer

When the supply curve is perfectly elastic, sellers are willing to supply any quantity at a specific price. If an excise tax is imposed, the entire tax burden falls on buyers, as sellers cannot accept a lower price.

If the Market Supply Curve Is Perfectly Elastic and an Excise