In 1984, the South Carolina State Supreme Court ruled that a 20 percent admission tax on X-rated movies was unconstitutional. When the affected cinemas sought a refund of collected taxes, they were denied on the grounds that the tax, although collected by the theater, was indeed paid by the theatergoers. The Supreme Court apparently believed

A. the supply of X-rated movies was perfectly elastic.
B. the demand for X-rated movies was perfectly inelastic.
C. the legislation intended that the theatergoers pay the tax.
D. the burden fell on the theatergoers—there are no excess burdens on the theater.


Answer: B

Economics

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