If supply is perfectly elastic in a consumer goods market, a per unit tax will always be inefficient unless the market demand curve for consumers is perfectly inelastic.
Answer the following statement true (T) or false (F)
False
Rationale: The perfect elasticity of the supply curve implies the tax will be passed to consumers. But if there is no substitution effect (as in the case of perfect complements), the tax will be efficient even if the market demand curve is downward sloping because of income effects.
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