Assume that the demand for food is relatively inelastic and the demand for jewelry is relatively elastic. Which of the following statement(s) is correct?(x) Suppose government imposed the same excise tax on both goods. The tax revenue from the tax onjewelry will always be more than the tax revenue from the tax on food.(y) Suppose government imposed the same excise tax on both goods. The deadweight loss from imposing atax on food would be more than the deadweight loss from imposing a tax on jewelry.(z) If the size of a tax decreases for either good, then the deadweight loss decreases for that good.(x), (y) and (z)(x) and (y) only(x) and (z) only(y) and (z) only(z) only

Answer: If the same tax is imposed on the goods having elastic and inelastic demand then the good…

Answered: Assume that the demand for food is…

Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781305971509

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter8: Application: The Costs Of Taxation

Section: Chapter Questions

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Assume that the demand for food is relatively inelastic and the demand for jewelry is relatively elastic. Which of the following statement(s) is correct?
1. (x) Suppose government imposed the same excise tax on both goods. The tax revenue from the tax on
  
  jewelry will always be more than the tax revenue from the tax on food.
2. (y) Suppose government imposed the same excise tax on both goods. The deadweight loss from imposing a
  
  tax on food would be more than the deadweight loss from imposing a tax on jewelry.
3. (z) If the size of a tax decreases for either good, then the deadweight loss decreases for that good.
1. (x), (y) and (z)
2. (x) and (y) only
3. (x) and (z) only
4. (y) and (z) only
5. (z) only

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