Understanding Incidence of Excise Taxes
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Questions and Answers

Who bears the incidence of an excise tax in a competitive market with perfectly inelastic demand?

  • Producers
  • Investors
  • Consumers (correct)
  • Government

    • What happens to the incidence of an excise tax in a competitive market with perfectly elastic demand?

  • Producers bear the tax (correct)
  • Government bears the tax
  • Consumers bear the tax
  • Investors bear the tax

    • What is the impact of a competitive market with perfectly inelastic demand on the incidence of an excise tax?

  • Government bears the tax
  • Producers bear the tax
  • Investors bear the tax
  • Consumers bear the tax (correct)

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