If the Government Is Most Interested in Minimizing Excess Burden

question 103

Essay

If the government is most interested in minimizing excess burden of an excise tax, should it impose the tax on goods that are elastic or on goods that are inelastic?

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Definitions:

Voting Shares

Shares that give the shareholder the right to vote on company matters, such as electing the board of directors.

Sale

A transaction between two parties where the buyer receives goods, services, or assets in exchange for money.

Consolidated Net Income

The total net income of a parent company and its subsidiaries after the elimination of inter-company transactions and distributions to minority interests.

Equity Method

An accounting technique used by companies to assess the profits earned through their investments in other companies by reporting these profits as an increase in the asset value of the investment.