question archive In a market with an inelastic (vertical) supply curve, what is the effect of a $1
Subject:EconomicsPrice:2.88 Bought3
In a market with an inelastic (vertical) supply curve, what is the effect of a $1.00 per unit tax (paid by consumers)?

The effect is that price rises by exactly $1 and the consumer pays nothing. Remember that the tax burden primarily falls on the party with the less elastic curve. In this case, producers have a perfectly inelastic supply curve and thus receive the entire tax burden.

