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Imagine that you work for the central bureaucracy and you need to raise revenue.You want to use a per-unit tax on some good.There are two
Imagine that you work for the central bureaucracy and you need to raise revenue.You want to use a per-unit tax on some good.There are two possible goods.The current equilibrium price and quantity are the same for both goods.However, for good A,boththe supply and demand are more elastic than for good B.The tax will be $1/unit regardless of which good you choose to tax.Which good will give you more revenue?Which one will be more efficient?Show this with two graphs.
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