Explain Why a 10 Percent Tax Would Be More Destructive

question 131

Essay

Explain why a 10 percent tax would be more destructive in an industry where the demand for the product is highly price elastic as opposed to another industry where product demand is price inelastic.

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Definitions:

Marginal Utility

The shift in happiness or benefit a person receives from using one more unit of a particular product or service.

All-you-can-eat

A service often provided by restaurants where customers can consume as much food as they want for a fixed price.

Buffet Restaurants

Restaurants that offer a variety of foods displayed on a buffet table, allowing customers to serve themselves a wide range of dishes for a fixed price.

Value Loss

The decrease in the worth or price of an asset or a commodity in the market over time.