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In 2010 the city of Omaha introduced a 2.5 percent restaurant tax on items purchased on food and beverages sold a local area eating establishments.
In 2010 the city of Omaha introduced a 2.5 percent restaurant tax on items purchased on food and beverages sold a local area eating establishments. Some concerns at the time were that this tax would hurt restaurant revenues because the tax would discourage residents from eating out because eating out at restaurants is considered discretionary spending, implying elastic demand. However, all available data suggests that this didn't happen and revenues were not adversely impacted by the tax. In fact, it appears that demand is fairly inelastic. Of the choices below, which would best explain this situation
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