You are chairperson of a state tax commission responsible for establishing a program to raise new revenue through excise taxes. In your own words please give a detailed explanation as to why would elasticity of demand be important to you in determining the products on which the taxes should be levied?
Please fully explain your answer in a way that shows depth and understanding, using real world examples and/or knowledge, of elasticity of demand.© BrainMass Inc. brainmass.com October 10, 2019, 1:16 am ad1c9bdddf
Elasticity of demand is perhaps the most important factor in taxation. It determines whether revenue will be raised, or if the implementation of the tax will just be a burden on society.
The best way to demonstrate this is with examples. First let's look at a good with a high elasticity of demand such as luxury cars. A ...
Why elasticity of demand is important for taxation decisions