Question

In a market where the supply curve is perfectly inelastic, how does an excise tax affect the price paid by consumers and the quantity bought and sold?

Answer 1

Answer:

The sellers in the perfectly inelastic supply condition does not care about the price as the quantity supplied by them is being maintained i.e. remain unchanged even in situation of introduction of any tax. This means that the tax burden of the newly introduced tax is borne by the seller only.

It is helpful or not