An increase in tax rates on a product will raise more revenue, the more inelastic is the demand curve.

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When the demand for a product is inelastic, it means that consumers are not very responsive to changes in price. Therefore, if tax rates are increased on such a product, consumers will continue to buy it even though its price has increased. This will result in more revenue for the government as the quantity demanded remains relatively constant. On the other hand, if the demand for a product is elastic (i.e. consumers are very responsive to changes in price), then an increase in tax rates will cause a significant decrease in the quantity demanded, resulting in lower revenue for the government.

An Increase in Tax Rates on a Product Will Raise