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

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Definitions:

Enabling Statute

A law that gives a government entity or agency the authority to take specific actions.

Zoning

Regulations governing the use of land and structures within certain areas to control and direct urban growth and land use.

Lien Theory

A legal theory under which real estate acts as security for the repayment of a debt, with the lender holding an interest in the property until the mortgage is paid in full.

Title Theory

A legal concept in real estate that posits that the mortgage lender holds the title to the property until the mortgage is fully paid off.