Which Would Be a Better Source of Tax Revenue for the Government

question 124

Essay

Which would be a better source of tax revenue for the government, a good with elastic or a good with an inelastic demand? Explain your reasoning.

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Definitions:

Passive Strategy

An investment strategy that aims to match, rather than outperform, market returns by mimicking the investment holdings of a particular index.

Benchmark Portfolio

A standard or point of reference against which the performance of an investment portfolio can be measured.

M-Squared Measure

A measure used in finance to evaluate the performance of an investment portfolio by adjusting for its risk level compared to a benchmark.

Risk-Adjusted Return

This is a measure of how much risk is involved in generating a security's or portfolio's return, helping investors to compare the performance of different investments on a risk-adjusted basis.