Which would be a better source of tax revenue for the government, a good with elastic or a good with an inelastic demand? Explain your reasoning
What will be an ideal response?
Inelastic goods are better sources of tax revenue because, as price rises, the equilibrium quantity does not decrease by as much as that of a good with elastic demand. The government's tax revenue, which depends on the equilibrium quantity of the good, is larger when a good with an inelastic demand is taxed.
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If a purely competitive firm is producing at some level less than the profit-maximizing output, then:
A. price is necessarily greater than average total cost. B. fixed costs are large relative to variable costs. C. price exceeds marginal revenue. D. marginal revenue exceeds marginal cost.
If a corporate bond with face value of $5,000 has an interest rate of 4 percent paid once a year for a term of 30 years, what is the size of the coupon payment?
A) $4 B) $200 C) $1,250 D) $5,000