If You Want to Maximize Tax Revenue, You Should Advocate

question 12

Multiple Choice

If you want to maximize tax revenue, you should advocate taxing inputs used in the production of goods:

• A)with many substitutes.
• B)that are elastically demanded.
• C)that are inelastically demanded.
• D)that have price elasticities of demand equal to approximately 1 so that total sales are unaffected.
• E)with many complements.

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Definitions:

State Government Revenue

The income received by state governments, which can come from taxes, fees, and other sources.

Local Government Revenue

The income generated by local governments from taxes, fees, and grants to fund public services and infrastructure.

Taxes in The U.S.

Various compulsory financial charges imposed by the government on individuals and organizations to fund public expenditures.

Proportional

Characterized by a constant relationship in degree or number between two variables.