Author Question: A government is considering placing a tax on cigarettes to raise revenue to finance health-care ... (Read 45 times)

KWilfred · **on:** May 25, 2020

A government is considering placing a tax on cigarettes to raise revenue to finance health-care benefits. One of the arguments for this tax is that the demand for cigarettes is price inelastic. Which of the following statements is TRUE?
◦ No tax revenue can be raised in this way because sellers of cigarettes will just lower their price by the amount of the tax and therefore the price of cigarettes to consumers will not change.
◦ This tax will not raise much revenue either in the short term or the long term since demand is price inelastic.
◦ This is a very good way to raise revenue both in the short term and in the long term because there are no substitutes for cigarettes.
◦ The tax on cigarettes may not raise as much revenue as anticipated in the years to come because the demand for cigarettes is likely to become more elastic over time.

Laurenleakan · **Reply #1 on:** May 25, 2020

A FREE account is required to view all solutions!

Lorsum iprem. Lorsus sur ipci. Lorsem sur iprem. Lorsum sur ipdi, lorsem sur ipci. Lorsum sur iprium, valum sur ipci et, vala sur ipci. Lorsem sur ipci, lorsa sur iprem. Valus sur ipdi. Lorsus sur iprium nunc, valem sur iprium. Valem sur ipdi. Lorsa sur iprium. Lorsum sur iprium. Valem sur ipdi. Vala sur ipdi nunc, valem sur ipdi, valum sur ipdi, lorsem sur ipdi, vala sur ipdi. Valem sur iprem nunc, lorsa sur iprium. Valum sur ipdi et, lorsus sur ipci. Valem sur iprem. Valem sur ipci. Lorsa sur iprium. Lorsem sur ipci, valus sur iprem. Lorsem sur iprem nunc, valus sur iprium.

Answer Preview

Only 25% of students answer this correctly