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Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383

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BuyFindarrow_forward

Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383
Textbook Problem

Under what condition would a per-unit tax placed on the sellers of computers be fully paid by the buyers of computers?

To determine

Identify the tax conditions when the sellers can transfer the impact of tax to the buyers.

Explanation

If a commodity has a perfectly elastic supply or perfectly inelastic demand, then a per-unit tax placed on the sellers of a product can fully be paid by the buyers of the product. The reason is because if the product has perfectly elastic supply, then a price increase due to the tax by a small amount leads to an increase in the supply infinitely...

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