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If the Government Is Interested in Generating a Large Revenue

Question 3

Multiple Choice

If the government is interested in generating a large revenue from placing a tax on the consumption of a particular good, it should choose a good for which


A) the demand is price elastic
B) the demand is unit elastic with respect to price
C) the supply is perfectly elastic
D) the demand is price inelastic
E) there are many good substitutes

Correct Answer:

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