Question

Suppose the supply of a good is perfectly elastic while the demand is elastic. The burden of a tax on
the drug will
A) be shared by the buyers and sellers.
B) fall entirely on the sellers.
C) fall entirely on the buyers
D) fall on neither the buyers nor the sellers.

Answer 1

Answer
Option C
C) fall entirely on the buyers
A perfectly elastic supply shifts up by the tax amount, and the buyer pay price equal to the old plus tax and seller receives the same price as earlier.