1. Sharing of the Tax Burden
Perfectly elastic supply

2. If supply is perfectly elastic,Q S0 D Q1 P1 S1 t

3. But the producer receives the same price.
If supply is perfectly elastic, the consumer pays P2 for every unit of the good,
But the producer receives the same price. D P Q P2 S1 Q2
P3 = P1 S0 Q1

4. but producer receives the same price.
If supply is perfectly elastic, the consumer pays P2 for every unit of the good,
but producer receives the same price.
The consumer bears the whole tax burden. P Q S0 D Q1 P1 S1 Q2 P2
P3 =
Consumer’s Share