random1010
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If a tax is levied on producers with perfectly inelastic supply does it reduce producer surplus?
how it would look on a diagram? thanks
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libero
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(Original post by random1010)
If a tax is levied on producers with perfectly inelastic supply does it reduce producer surplus?
how it would look on a diagram? thanks
perfectly inelastic supply graph is just a vertical line (think about it this way, if it's perfectly inelastic, then at all price points offered, the quantity would still remain the same). and no, because producer surplus is 0.
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random1010
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(Original post by libero)
perfectly inelastic supply graph is just a vertical line (think about it this way, if it's perfectly inelastic, then at all price points offered, the quantity would still remain the same). and no, because producer surplus is 0.
I thought producer surplus is infinite not 0?
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