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WAEC Economics 1999 Question 31

Question 31

Public Finance

Government revenue will increase if tax is imposed on a good whose demand is

  1. A.elastic
  2. B.inelastic
  3. C.unitary elastic
  4. D.perfectly elastic
Show the answer and explanation

Answer: B (inelastic)

Explanation

With inelastic demand, people keep buying after the tax raises the price, so tax revenue rises.