In order to raise more tax revenue, what type of goods should the government tax?
A) goods with unit elastic demand curves over goods with inelastic demand curves
B) goods with inelastic demand curves over goods with elastic demand curves
C) goods with elastic demand curves over goods with inelastic demand curves
D) goods with elastic demand curves over goods with unit elastic demand curves

Question

Quizplus · Accepted Answer

Goods with inelastic demand curves are less sensitive to price changes, meaning consumers will continue to buy them even when prices increase due to taxation. This makes them more reliable sources of tax revenue compared to goods with elastic demand, where a price increase could significantly reduce the quantity sold.

In Order to Raise More Tax Revenue, What Type of Goods