If a tax of 5 cents a tomato lowers the price received by tomato sellers by 5 cents a tomato,then the supply of tomatoes is perfectly ________ and the seller pays ________ the tax.

Question

Quizplus · Accepted Answer

If the supply of tomatoes is perfectly inelastic, it means that the quantity supplied does not change regardless of the price. Therefore, if a tax is imposed and the price received by sellers decreases by the full amount of the tax, it indicates that sellers are unable to pass any of the tax burden onto buyers, meaning they bear the entire cost of the tax.

If a Tax of 5 Cents a Tomato Lowers the Price