Consumers will lose no consumer surplus due to a tax if demand in their market is perfectly elastic because

Question

Quizplus · Accepted Answer

If demand is perfectly elastic, consumers will stop buying the product altogether if the tax changes the price of the product. In this case, consumers will not experience any loss in consumer surplus because they can easily switch to alternative products or stop consuming altogether. Therefore, the tax burden will be entirely borne by the producer, and the consumer surplus will remain unchanged.

Consumers Will Lose No Consumer Surplus Due to a Tax