The incidence of an increase in tax on a commodity with perfectly inelastic demand will be on the

The incidence of an increase in tax on a commodity with perfectly inelastic demand will be on the

Answer Details

In the case of a commodity with perfectly inelastic demand, consumers are willing to pay any price for it, so an increase in tax on this commodity will be passed entirely onto the consumer. Therefore, the incidence of the tax will be on the consumer.