Question

governments that are interested in minimizing the efficiency costs of taxation should only tax goods where

Answer 1

Answer:

Governments that are interested in minimizing the efficiency costs of taxation should only tax goods where demand or supply, or both, are relatively inelastic.

Explanation:

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Answer 2

If a government is interested in minimizing the efficiency cost of taxation, they should only tax goods where the demand, supply, or both are relatively inelastic. If the price is elastic, then the tax could change the efficiency of the cost. Remember, prices that are inelastic are harder to change, while elastic prices are easier to effect through things such as taxes.

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