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Using this website http://money.cnn.com/2008/11/17/news/economy/sloan_gastax.fortune/index.htm
How would the following questions be answered?

1) Explain why he refers to this as market driven policy.
2) What role does elasticity of demand play in the author's position?
3) What are other instances where government will levy this type of tax (sales or excise tax)and why do they levy this type of tax?

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How would the following questions be answered?

1) Explain why he refers to this as market driven policy.

He refers to this as a market driven policy because it were the market forces that pushed up the prices of gasoline recently, and in future also it will be the market forces that will bring another spike in the prices of gasoline. The author is proposing a tax so that the harm the tax spikes do to us is mitigation. This is a market driven policy because keeping the taxes high will hold down the demand for gasoline and this alone may prevent a ...

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Hatim Baxamusa, MBA
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  • BSc , University of Calcutta
  • MBA, Eastern Institute for Integrated Learning in Management
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