Governments seeking to maximize total tax revenue will place unit taxes on goods with the
A) b and c
B) lowest income elasticity
C) highest cross elasticity
D) lowest price elasticity
E) fewest complements

Question

Quizplus · Accepted Answer

Governments aiming to maximize total tax revenue will target goods with the lowest price elasticity because consumers are less sensitive to price changes for these goods, meaning that demand will not significantly decrease as the price increases due to the tax. This ensures a steady stream of revenue from taxes on these goods.

Governments Seeking to Maximize Total Tax Revenue Will Place Unit