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WAEC Economics 2000 Question 30

Question 30

Public Finance

A tax on a commodity whose demand is perfectly inelastic will fall heavily on the

  1. A.consumers
  2. B.manufacturers
  3. C.wholesalers
  4. D.retailers.
Show the answer and explanation

Answer: A (consumers)

Explanation

If demand does not respond to price, the seller can pass the whole tax on in a higher price, so consumers bear it.