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ECON 101 - Governments impose taxes for several

Question # 00543538
Subject: Economics
Topic: Microeconomics
Due on: 06/10/2017
Posted On: 06/10/2017 01:30 AM

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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 $4.00. Explain your answer.
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