question archive If the supply curve is perfectly elastic (horizontal) and a $10 per unit sales tax is imposed on the buyers, then the net price received by suppliers will a
If the supply curve is perfectly elastic (horizontal) and a $10 per unit sales tax is imposed on the buyers, then the net price received by suppliers will a
Subject:EconomicsPrice:2.88 Bought3
If the supply curve is perfectly elastic (horizontal) and a $10 per unit sales tax is imposed on the buyers, then the net price received by suppliers will
a. decrease by more than $10.
b. decrease by exactly $10.
c. decrease but by less than $10.
d. not decrease.
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The answer is d. not decrease.
Explanation:
- The supply is perfectly elastic
- There is a $10 tax imposed
The tax incidences will be borne by customers in case of perfectly elastic supply, and the net price received by suppliers will be the same as before tax incidence.
