Homework Answers
B.
Elastic
Not change in the price of the good.
Explanation:
Because demand curve is perfectly elastic, the consumers are very sensitive to the price.
The whole burden of the tax is on the producers.
i.e if any tax is there then it's burden will be completely on the producers. They cannot increase the price of the product, which will harm the quantity demanded. In a market with perfectly elastic demand curve when price is increased the demand of the good will be zero. Hence,
There will be no change in the price of the good.
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