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Taxation as a Tool

Concept of el...

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Concept of elasticity of demand is useful for finance minister.

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True

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False

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Solution

The correct option is A True
Concept of elasticity of demand is useful for finance minister. It helps the finance minister to levy taxes on the goods which have inelastic demand. The government can collect more money and increase government revenue, It helps in planning also.

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Q. Concept of 'elasticity of demand' is useful for the finance minister.

Q. State whether the following statement are TRUE and FALSE.

1. Demand for luxuries is elastic.

2. Perfectly inelastic demand curve is parallel to the X axis.

3. Total outlay is price multiplied by quantity.

4. Unitary Elastic Demand rarely occurs in practice.

5. Concept of Elasticity of Demand is useful for finance minister.

Q. Elasticity of demand is a very useful concept for producers, __________.

Q. What is the importance of concept of elasticity of demand.

Q. Give reasons or explain the following statements:

1. Demand for necessaries is inelastic.

2. Demand for habitual goods is inelastic.

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4. Demand for commodity having multiple uses has elastic demand.

5. Demand for goods having snob appeal has elastic demand.

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