Which would be a better source of tax revenue for the government, ...

[daltonest1984]

Which would be a better source of tax revenue for the government, a good with elastic or a good with an inelastic demand? Explain your reasoning.
 
  What will be an ideal response?

Question 2

Activity aimed at creating artificial barriers to entry into a particular market
 
  A) is rent seeking.
  B) has no social cost.
  C) improves competition.
  D) improves the economy's efficiency.

[qytan]

Answer to Question 1

Inelastic goods are better sources of tax revenue because, as price rises, the equilibrium quantity does not decrease by as much as that of a good with elastic demand. The government's tax revenue, which depends on the equilibrium quantity of the good, is larger when a good with an inelastic demand is taxed.

Answer to Question 2

A