A tax on all goods consumed

Question

Quizplus · Accepted Answer

A tax on all goods consumed would cause distortions between consumer goods and other goods and services. This is because different goods have different elasticities of demand, meaning people may be more or less likely to purchase them based on the tax. For example, if a tax is placed on vegetables, people may be more likely to purchase processed foods that are not taxed, leading to a distortion in consumption patterns. Therefore, a tax on all goods consumed would not be efficient or equitable.

A Tax on All Goods Consumed