For any given tax, the revenue generated is: larger in markets with price-elastic demand and supply....
For any given tax, the revenue generated is:
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larger in markets with price-elastic demand and supply.
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smaller in markets with price-elastic demand and supply.
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always maximized in markets with price-elastic demand and supply.
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the same regardless of price elasticity.
Homework Answers
Ans.- (B)
Tax revenue depends on the elasticity of demand and supply curves.
Tax revenue is larger the more inelastic the demand and supply curves are. If supply and demand curves are very elastic, then tax revenue will be lower.
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