In the country of Bora Bora, consumers buy large quantities of alcohol, tobacco, and coffee. Last year, the prices of these goods each increased by 10 percent. The quantities demanded for these goods fell by 10, 3, and 8 percent, respectively. If the government is thinking about imposing a unit tax on one of these goods, which good should they choose to tax to raise the most tax revenue, and why?
a. alcohol; because the price elasticity is highest
b. tobacco; because the price elasticity is lowest
c. coffee; because it will have the lowest tax elasticity
d. tobacco; because it will have the highest tax elasticity
e. alcohol; because the burden of taxation would be more even
B
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A) Constrained discretion B) A policy rule C) A discretionary policy D) The Taylor rule
If the bidders at an oral auction have true values of $78, $72, $66, and $65, the item will sell for
a. $78 b. just under $78 c. $72 d. just over $72
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A. $7.25 per hour. B. $6.50 per hour. C. $8.00 per hour. D. $7.73 per hour.
Many people believe that the supply and demand for regulation in an industry often results in the creation of a powerful coalition group controlling the regulatory body. That powerful group often comprises of executives from the same industry that is supposed to be regulated. This is called:
A. capturing. B. internalization of externalities. C. adverse selection. D. free-riding.