If the Demand for Good X Is Perfectly Inelastic and a Tax

question 186

Multiple Choice

If the demand for good X is perfectly inelastic and a tax is levied on the producers of each unit:

• A)consumers pay the entire tax,and deadweight loss will occur because the equilibrium quantity of good X falls.
• B)consumers pay the entire tax,and there is no deadweight loss because the equilibrium quantity of good X remains constant.
• C)consumers and producers share the burden of the tax,and there is no deadweight loss because the equilibrium quantity of good X remains constant.
• D)producers pay the entire tax,and deadweight loss will occur because the equilibrium quantity of good X falls.

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