匿名
匿名 發問於 商業及金融其他 - 商業及金融 · 1 十年前

inelastic demand

why government raise more money from taxation when taxing commodities with inelastic demand?

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  • 1 十年前
    最愛解答

    It is because for commodities with inelastic demand, when government raise taxes on those commodities, the prices would be risen and quantity demanded would be decreased. However, the percentage fall in quantity demanded is much smaller than the percentage rise in price because the demand is inelastic, hence government can increase tax revenue on those goods. Otherwise, tax revenues would be lowered for goods with elastic demand.

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