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 equilibrium price drops. C)the producer must absorb the entire tax. D)the producer can generally only pass part of the tax onto the consumer.
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 equilibrium price drops. C)the producer must absorb the entire tax. D)the producer can generally only pass part of the tax onto the consumer.
Chapter1: Federal Income Taxation—an Overview
Section: Chapter Questions
Problem 76DC
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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 equilibrium price drops.
C)the producer must absorb the entire tax.
D)the producer can generally only pass part of the tax onto the consumer.
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