If an Excise Tax Is Placed on a Product That

Multiple Choice

If an excise tax is placed on a product that has a perfectly inelastic demand, then:

A) the entire tax will be paid by the consumer.
B) the entire tax will be paid by the producer.
C) the consumer and producer will each pay a share of the tax.
D) the incidence of the tax cannot be determined unless we know the coefficient of price elasticity of supply.