Governments Impose Excise Taxes on Goods That Have Inelastic Demand,such

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The Answer is Imposing an excise tax reduces the supply of the good,reducing equilibrium quantity and raising the price.If demand is elastic,taxes will tend to reduce quantity by a significant amount,and thus government tax revenues will be relatively small.However,if demand is inelastic,the reduction in quantity will be small,and government tax revenues will be higher.(Governments may also impose taxes to deter consumption,but this is likely to be ineffective if elasticity is low.)

Governments Impose Excise Taxes on Goods That Have Inelastic Demand,such

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Governments Impose Excise Taxes on Goods That Have Inelastic Demand,such

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