In order to enable the government of a country to increase its tax revenue, it will be advisable for it to increase taxes on_______
a
Textile materials with elastic demand
b
Alcoholic beverages with inelastic demand
c
Agricultural products with inelastic supply
d
Luxury goods with elastic supply
Explanation
Correct Option
aNo explanation available
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Discussions (3)
agha.j
3 years ago
Alcohol is medically inadvisable for the citizens. As the demand is inelastic, it means an increase in price would have little or no effect on the quantity demanded and so, adding taxes to such item would not be detrimental.
kynagrego
1 year ago
OPTION A IS WRONG. B IS THE CORRECT OPTION.
AN INCREASE IN GOVERNMENT TAX ON ALCOHOL WITH AN INELASTIC DEMAND WILL HAVE LEAST IMPACT ON QUANTTY DEMANDED AND MORE TAX REVENUE.
