Suppose the Government Increases the Tax on Petrol in Order

Multiple Choice

Suppose the government increases the tax on petrol in order to raise revenue.Since raising the petrol tax would increase the price of petrol, the government must be assuming that the:

A) demand for petrol is price elastic
B) demand for petrol is price inelastic
C) demand for petrol is price unit elastic
D) tax on petrol will not affect the consumption of petrol