True or false? Imposing a specific tax in a market with a horizontal supply curve will have no impact on the equilibrium quantity sold in the market

Economics Dec 08, 2020

True or false? Imposing a specific tax in a market with a horizontal supply curve will have no impact on the equilibrium quantity sold in the market.

Expert Solution

This statement is False.

The producers are willing to supply any amount of quantity at the given level of price in case of a horizontal supply curve. Therefore, with the imposition of the tax, the quantity supplied will be zero because it will fluctuate the price at which manufacturers are willing to offer the quantity.

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