If a government tax has as its purpose the raising of revenue, it would be best to place the tax on a product which:
A) is a non-essential.
B) has a highly elastic demand.
C) has many good substitutes.
D) has a highly inelastic demand.
E) has a unit elastic demand curve.

Question

Quizplus · Accepted Answer

A product with a highly inelastic demand means that consumers will continue to buy it even if the price increases due to the tax. This means that the revenue raised by the tax will be more stable and reliable. Additionally, placing a tax on a product with an inelastic demand will not significantly deter consumers from buying it, so it will not have adverse effects on the market.

If a Government Tax Has as Its Purpose the Raising