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Sydney Braun
on Oct 25, 2024

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If the government levies an excise tax in a market whose demand curve is perfectly inelastic,the burden of the tax will fall completely on the _____,and the deadweight loss will equal _____.

A) consumers;zero
B) producers;zero
C) consumers;the tax revenue
D) producers;the tax revenue

Perfectly Inelastic

A market condition where the quantity demanded or supplied does not change in response to price changes.

Deadweight Loss

An economic inefficiency that occurs when the total welfare in a market is not maximized, resulting from distortions such as taxes, subsidies, or monopolies.

Excise Tax

A tax imposed on specific goods, services, or activities, often included in the price of products like tobacco, alcohol, and fuel, designed to discourage their use or generate revenue.

  • Familiarize yourself with how tax burdens are spread between consumers and producers.
  • Understand the concept of tax incidence and how it is affected by the elasticity of demand and supply.
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JACOB DRUSKINOct 29, 2024
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