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    Elasticity of Demand and taxation

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    Consider this:

    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.

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    https://brainmass.com/economics/taxation/elasticity-of-demand-and-taxation-327951

    Solution Preview

    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 ...

    Solution Summary

    Why elasticity of demand is important for taxation decisions

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