Excise taxes that raise the most revenue and cause the least deadweight loss are likely to be levied on goods for which demand is _____ and supply is _____.

Question

Quizplus · Accepted Answer

Excise taxes on goods with inelastic demand and inelastic supply raise more revenue and cause less deadweight loss because consumers and producers are less responsive to price changes, leading to smaller changes in quantity traded.

Excise Taxes That Raise the Most Revenue and Cause the Least