Use the following table for this question
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 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 work.
(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 work. (e) If the government wants to decrease the quantity consumed of soft drinks by 30%, what percentage of tax would they have to levy on soft drink consumption? Show your work.
Use the following table for this question
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 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 work.
(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 work. (e) If the government wants to decrease the quantity consumed of soft drinks by 30%, what percentage of tax would they have to levy on soft drink consumption? Show your work.
