How successful would a $1 excise tax on each Little Caesar's pizza be in generating revenue if Little Caesar's is the only pizza chain that is taxed?
A) Many people like Little Caesar's, so demand is inelastic and the tax revenue generated will be large.
B) You can get pizza at many other place, which makes the demand for Little Caesar's relatively elastic and, as a result, the tax revenue collected will be small.
C) The supply of Little Caesar's pizza is perfectly inelastic, so this tax would not generate any revenue.
D) The demand for Little Caesar's pizza is perfectly elastic, so the tax will not generate any revenue.
E) The supply of Little Caesar's pizza is perfectly elastic, so this tax will generate the maximum amount of revenue.
Correct Answer:
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