An excise tax will generate more revenue to the government, the more price elastic the demand for the product is.

Question

Quizplus · Accepted Answer

An excise tax will generate more revenue to the government, the more inelastic the demand for the product is. When the demand for a product is price elastic, consumers will decrease their purchases of the product in response to a price increase caused by the tax, resulting in less revenue for the government.

An Excise Tax Will Generate More Revenue to the Government