To raise the most tax revenue, governments should consider taxing goods with:
A) income elastic demands
B) price inelastic demands.
C) income elastic demands.
D) income inelastic demands.
E) cross price elastic demands.

Question

Quizplus · Accepted Answer

Goods with price inelastic demands are the best option for governments to tax as consumers will continue to purchase them even if the prices are raised. This means that the tax will not significantly impact the quantity demanded, and the government can still collect a significant amount of tax revenue.

To Raise the Most Tax Revenue, Governments Should Consider Taxing