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The Government Is Deciding Where to Put a $1 Tax-Either

Question 141

Multiple Choice

The government is deciding where to put a $1 tax-either in a market with elastic supply and demand curves,or a market with inelastic supply and demand curves.If their aim is to raise the most revenue with the smallest deadweight loss,where should the tax be placed?


A) In the market with elastic supply and demand curves
B) In the market with inelastic supply and demand curves
C) It is impossible to say without more information
D) Since the burden is shared, it doesn't matter in which market it is placed

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