A Tax on a Good Whose Demand Is Perfectly Price

question 86

True/False

A tax on a good whose demand is perfectly price inelastic will be effective in discouraging consumption of that good.

---

Definitions:

Demand

Demand in economics is defined as consumers' willingness and ability to purchase goods or services at a given price over a specific period of time.

Normal Goods

Goods for which demand increases as consumer income rises, and decreases when consumer income falls.

Inferior Goods

Goods for which demand decreases as the income of consumers increases, opposite to normal goods.

Quantity Demanded

Refers to the total amount of a good or service that consumers are willing and able to purchase at a given price level in a given period.