Suppose the government wants to tax the good that will generate more tax revenue at a lower welfare cost. In this case, it should tax because, all else held constant, taxing a good with a relatively elastic demand generates larger tax revenue and smaller deadweight loss.

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29-06-2022
Business

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Suppose the government wants to tax the good that will generate more tax revenue at a lower welfare cost. In this case, it should tax because, all else held constant, taxing a good with a relatively elastic demand generates larger tax revenue and smaller deadweight loss.

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nikitavidya0 nikitavidya0 · Answer 1 · 2022-07-07T11:56:54+02:00

The Government should tax Smartphones because all else held constant taxing a good with a relatively less elastic demand generates larger tax revenue and smaller dead weight loss.

What is Elastic demand?

An elastic demand refers to the change in the quantity demanded which takes place due to the change in the prices of the commodity. The prices changed in the large.

The complete question is attached below.

The opposite of the Elastic demand is Inelastic Demand which refers to the change in the demand in response to the smaller change in the prices of the commodity.

Smartphones should be subject to a tax because, all else being equal, taxing a good with a substantially less elastic demand results in greater tax revenue and less waste.

Learn more about Elastic demand here:

https://brainly.com/question/23301086

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