Government Revenue from an Excise Tax of a Given Amount

question 1

True/False

Government revenue from an excise tax of a given amount is greater when demand is relatively inelastic than when it is relatively elastic.

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Definitions:

Producer Surplus

The difference between what producers are willing to sell a good for and the actual price they receive.

Excess Demand

A situation where the quantity demanded of a good or service exceeds its quantity supplied at a particular price.

Rent Ceiling

A regulatory limit on the amount of rent a landlord can charge tenants, often imposed by government to keep housing affordable.

Demand Curve

A graphical representation showing the relationship between the price of a good and the quantity demanded.