If the government institutes a specific tax for a good that has a perfectly inelastic demand curve
A) the producer passes the entire tax on to the consumer.
B) the producer must absorb the entire tax.
C) the producer can generally only pass part of the tax onto the consumer.
D) the equilibrium price drops.
A
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Is a uniform per-unit tax on firms that cause an externality an optimal policy for correcting the externality? Explain
What will be an ideal response?
The greatest advantage of the railroad over earlier forms of transportation was its speed and its ability to stay open throughout most of the winter. Robert Fogel attempted to measure the advantage of faster all-weather transport by examining:
a. profits in transportation industries as a group. b. profits in railroads compared with canals. c. employment of labor and capital in the transportation sector before and after the railroad. d. inventories of agricultural products held in eastern markets.