1. Sharing of the Tax Burden
Perfectly elastic demand

2. For perfectly elastic demand, the consumer still pays the same price for every unit of the goods,Q t
P2 = P1 D Q2 Q1

3. For perfectly elastic demand, the consumer still pays the same price for every unit of the goods, but the producer receives only P3. S0 D P Q P1 Q1 S1 Q2
P2 = P3

4. The producer bears the whole tax burden.
For perfectly elastic demand, the consumer still pays the same price for every unit of the goods, but the producer receives only P3.
The producer bears the whole tax burden. S0 D P Q P1 Q1 S1 Q2
P2 = P3
Producer’s Share