Question #52344
What is the effect of a $ 1 specific tax on equilibrium price and quantity if the demand is perfectly inelastic?
1
Expert's answer
2015-06-09T11:20:53-0400
If demand is perfectly inelastic, then the quantity demanded will be the same at any price, so there will be no effect of a $1 specific tax on equilibrium quantity, but equilibrium price will rise by $1 due to increase in taxes.

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