Suppose the Demand Curve Is Perfectly Inelastic and the Equilibrium

question 80

Essay

Suppose the demand curve is perfectly inelastic and the equilibrium price is $8 and equilibrium quantity is 9.If the government impose an excise tax of $1 per unit,what will be the new price and quantity traded? What is the total tax revenue and who pays the tax?

---

Definitions:

Citric Acid Cycle

A process where aerobic organisms produce energy by oxidizing acetate from carbohydrates, fats, and proteins into carbon dioxide through a sequence of chemical reactions.

Protein Molecules

Large biomolecules comprised of amino acids, essential for various biological functions including catalysis, structure, and regulation.

Amino Acids

Organic compounds that combine to form proteins and are used by organisms for growth, repair, and maintenance of body tissues.

Ammonia

Nitrogen-containing compound (NH3) that is a toxic product of amino acid breakdown; a large amount of water is required to excrete it.