Question

Taxes on goods with __________ demand curves will tend to raise more tax revenue for the government than taxes on goods with __________ demand curves.

Answer 1

Answer:

Inelastic; elastic

Explanation:

Goods with inelastic demand curves tend to raise more government revenue compared to goods with the elastic demand curve. An increase in price does not affect the demand of inelastic goods and it remains the same, that is why, governments usually increase the prices of goods that have inelastic demand curve, for example, petrol and toll tax, etc.