If an Excise Tax Is Placed on a Product That

question 47

Multiple Choice

If an excise tax is placed on a product that has a perfectly inelastic demand, then:​

• A) ​the entire tax will be paid by the consumer.
• B) ​the entire tax will be paid by the producer.
• C) ​the consumer and producer will each pay a share of the tax.
• D) ​the incidence of the tax cannot be determined unless we know the coefficient of price elasticity of supply.
• E) ​the tax is progressive.

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Definitions:

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Hawaiian

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