The Government Is Deciding Where to Put a $1 Tax-Either

question 48

Multiple Choice

The government is deciding where to put a $1 tax-either in a market with elastic supply and demand curves,or a market with inelastic supply and demand curves.If their aim is to raise the most revenue with the smallest deadweight loss,where should the tax be placed?

• A) In the market with elastic supply and demand curves
• B) In the market with inelastic supply and demand curves
• C) It is impossible to say without more information
• D) Since the burden is shared, it doesn't matter in which market it is placed

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