Regardless of how price inelastic the supply curve, tax revenue from a per-unit tax rises the more price inelastic the demand curve is.

Question

Quizplus · Accepted Answer

This statement is true. When the demand for a good is price inelastic, it means that consumers are not very responsive to changes in price, and as a result, they will continue to purchase the good even if its price increases due to the tax. This means that the tax will not significantly decrease the quantity demanded of the good, and therefore, the tax revenue from a per-unit tax will increase as the demand curve becomes more price inelastic.

Regardless of How Price Inelastic the Supply Curve, Tax Revenue