Government revenue will increase if taxes are levied on goods with?
- perfectly elastic demand
- fairly elastic demand
-
perfectly inelastic demand
- unitary elastic demand
The correct answer is: C
Explanation
A good with a perfectly inelastic demand will always sell irrespective of the change in the price of the product. This is one way the government can increase revenue generation through taxation.
An example of perfectly inelastic demand would be a lifesaving drug that people will pay any price to obtain