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You heard a commentator on TV make the following pronouncement: It is a smart idea for...

You heard a commentator on TV make the following pronouncement: It is a smart idea for the government to impose a sales tax on a luxury good, such as a yacht because the tax will affect the rich who can afford to pay for it and the government will collect more significant revenue. Do you agree with the commentator? Why or why not? Use the concept of elasticity of demand to explain your answer.

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a yacht is a luxury product and as we know for luxury products the demand is highly elastic and in luxury goods the seller cannot transfer the whole or a large amount of the tax to the buyer because the increase in price will lead to a decrease in demand to great extent. here if government imposes a sales tax on yacht or any other luxury goods the sells of the goods will decline significantly and the total revenue collected from increase in tax will not be significant. here i dont agree with the comentator because the imposed tax will decline the demand for the good and the sell as well so the revenue will also decline here as well.

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