Suppose the Government Is Looking to Raise Revenue by Taxing

Multiple Choice

Suppose the Government is looking to raise revenue by taxing a market and has hired you for advice on minimising the deadweight loss of taxation.In identifying which market to tax, you would advise the government to choose a market where:

A) supply is highly inelastic and demand is elastic
B) supply is highly elastic and demand is inelastic
C) any market where both supply or demand is highly inelastic
D) any market where both supply or demand is highly elastic