Suppose the demand for peaches from South Carolina is perfectly elastic.If the supply curve is upward sloping and a tax is imposed on peaches from South Carolina,then
A) peach sellers pay all of the tax.
B) peach buyers pay all of the tax.
C) peach buyers and sellers evenly split the tax.
D) the government does not collect any revenue from the tax.
E) the tax does not change the equilibrium quantity of peaches.

Question

Quizplus · Accepted Answer

When demand is perfectly elastic, consumers will not pay any higher price, so sellers must absorb the entire tax burden.

Suppose the Demand for Peaches from South Carolina Is Perfectly