Question
Considering the goals and inherent tradeoffs involved in the implementation of a tax. Which of the following alternatives is correct? (a) Taxes usually have two
Considering the goals and inherent tradeoffs involved in the implementation of a tax. Which of the following alternatives is correct? (a) Taxes usually have two conflicting goals: raise government revenue and discourage production/consumption of the good being taxed. (b) A tax will be more successful in discouraging production/consumption in markets where both supply and demand are price inelastic. (c) A tax will be more successful in raising government revenue in markets where both supply and demand are price elastic. (d) Subsidies have a single goal (encourage production/consumption) and therefore, are not subject to the same inherent tradeoffs involved in the implementation of a tax.
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