Use the following table for this question
the Good Own Price Elasticity of Demand
Cigarettes -0.50
Alcohol -1.00
Soft Drink -1.50
(a) If the government could raise taxes on one good, which product should the government increase tax rates in order to raise tax revenue? Briefly explain why.
(b) Which of the three products has a unitary elastic demand curve?
(c) If the government wants to decrease the quantity consumed of cigarettes by 20%, what percentage of tax would they have to levy on cigarette consumption? Show your working.
(d) If the government wants to decrease the quantity consumed of alcohol by 20%, what percentage of tax would they have to levy on alcohol consumption? Show your working.
(e) If the government wants to decrease the quantity consumed of soft drink by 30%, what percentage of tax would they have to levy on soft drink consumption? Show your working.
Use the following table for this question
the Good Own Price Elasticity of Demand
Cigarettes -0.50
Alcohol -1.00
Soft Drink -1.50
(a) If the government could raise taxes on one good, which product should the government increase tax rates in order to raise tax revenue? Briefly explain why.
(b) Which of the three products has a unitary elastic demand curve?
(c) If the government wants to decrease the quantity consumed of cigarettes by 20%, what percentage of tax would they have to levy on cigarette consumption? Show your working.
(d) If the government wants to decrease the quantity consumed of alcohol by 20%, what percentage of tax would they have to levy on alcohol consumption? Show your working.
(e) If the government wants to decrease the quantity consumed of soft drink by 30%, what percentage of tax would they have to levy on soft drink consumption? Show your working.
