A tax targeted to reduce consumption of a good by a specific quantity will raise the most revenue when: supply is inelastic and demand is elastic. supply is elastic and demand is inelastic. both supply and demand are elastic. both supply and demand are inelastic.

A tax targeted to reduce consumption of a good by a specific quantity will raise the most revenue when: supply is inelastic and demand is elastic. supply is elastic and demand is inelastic. both supply and demand are elastic. both supply and demand are inelastic.

Microeconomics

13th Edition

ISBN:9781337617406

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter6: Elasticity

Section: Chapter Questions

Problem 5QP

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Question

A tax targeted to reduce consumption of a good by a specific quantity will raise the most revenue when:

	supply is inelastic and demand is elastic.
	supply is elastic and demand is inelastic.
	both supply and demand are elastic.
	both supply and demand are inelastic.

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