Assuming the Basic Purpose Is to Raise Additional Revenue, Should

question 113

Essay

Assuming the basic purpose is to raise additional revenue, should government levy an excise tax on cigarettes whose demand is highly inelastic or on a product whose demand is highly elastic? Are there any other reasons to levy such a tax?

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Definitions:

Cartel Policies

Strategies and rules established by a cartel, an association of independent businesses formed to control production, pricing, and marketing of goods, to maximize collective profits.

American Automobile Producers

Companies based in the United States that manufacture cars, trucks, and other vehicles.

Successful Collusion

An agreement between competing entities to control prices or market shares for mutual benefit, often regarded as illegal or unethical.

Imposition of Tariffs

The act of a government applying taxes on imported goods to protect domestic industries and adjust trade balances.