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WAEC Economics 2021 Question 39

Question 39

Public Finance

In order to enable the government of a country to increase its tax revenue, it will be advisable for it to increase taxes on

  1. A.textile materials with elastic demand.
  2. B.alcoholic beverages with inelastic demand.
  3. C.agricultural products with inelastic supply.
  4. D.luxury goods with elastic supply.
Show the answer and explanation

Answer: B (alcoholic beverages with inelastic demand.)

Explanation

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