The Government Is Exploring Ways to Increase Revenues Through Taxation

question 46

Essay

The government is exploring ways to increase revenues through taxation.You are an economic adviser to public policy makers,and they pose to you the following question: Should the government tax yachts or should it tax gasoline? Explain your answer using price elasticity of demand.

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Definitions:

Drop

In a medical context, a small liquid measurement that is often used in medication dosages or to describe the volume of a substance.

Gtt

A medical abbreviation for "guttae," meaning drops; often used in prescriptions to specify medication dosages in drop form.

Proportion

A part, share, or number considered in comparative relation to a whole.

Ratio

A quantitative relationship between two numbers showing how many times one value contains or is contained within the other.