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.

Question

Quizplus · Accepted Answer

Placing the tax on a product with a highly inelastic demand means that consumers will continue to purchase the product even with the tax, which will result in a greater amount of revenue raised for the government. Products with a non-essential, highly elastic demand, or many substitutes may result in decreased demand and therefore less revenue generated from the tax.

If a Government Tax Has as Its Purpose the Raising