A tax is imposed on orange juice.Consumers will bear the full burden of this tax if the:

Question

Quizplus · Accepted Answer

If the supply curve for orange juice is perfectly inelastic, it means that producers cannot increase the quantity supplied in response to an increase in price. Therefore, the entire burden of the tax will be shifted onto consumers in the form of a higher price, as producers are not able to absorb any of the tax incidence.

A Tax Is Imposed on Orange Juice