Governments impose taxes for several reasons.
The most obvious reason is to raise tax revenues for the government.
If the goal of a government is to raise the maximum tax revenues, should a per unit tax be imposed on an item that has a price elasticity of demand that is elastic or inelastic.
A per unit tax is a tax that is charged as so much per unit of the item sold.
An example would be a tax of 42 cents per gallon of gas sold.
The tax would be 42 cents a gallon no matter if a gallon of gas had price of $2.
00 or $4.
Explain your answer.