Author Question: Which would be a better source of tax revenue for the government, a good with elastic or a good with ... (Read 84 times)

daltonest1984

  • Hero Member
  • *****
  • Posts: 536
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

  • Sr. Member
  • ****
  • Posts: 336
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



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
 

Did you know?

The top five reasons that children stay home from school are as follows: colds, stomach flu (gastroenteritis), ear infection (otitis media), pink eye (conjunctivitis), and sore throat.

Did you know?

Calcitonin is a naturally occurring hormone. In women who are at least 5 years beyond menopause, it slows bone loss and increases spinal bone density.

Did you know?

In Eastern Europe and Russia, interferon is administered intranasally in varied doses for the common cold and influenza. It is claimed that this treatment can lower the risk of infection by as much as 60–70%.

Did you know?

The newest statin drug, rosuvastatin, has been called a superstatin because it appears to reduce LDL cholesterol to a greater degree than the other approved statin drugs.

Did you know?

The horizontal fraction bar was introduced by the Arabs.

For a complete list of videos, visit our video library