A. elastic
B. inelastic
C. perfectly elastic
D. unitary elastic
Correct Answer:
Option B – inelastic
Explanation
High taxes should be imposed on goods whose demand is inelastic.
Inelastic demand is when the buyer’s demand does not change as much as the price changes. This means that no matter how high the prices may increase as a result of high taxes or other factors, people will still be willing to buy the goods.
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