Government revenue will increase if tax is imposed on a good whose demand is
Answer Details
If a tax is imposed on a good whose demand is inelastic, it means that consumers will continue to purchase the good despite the increase in price due to the tax. This is because the good is a necessity or there are no close substitutes available. As a result, the government revenue will increase because the tax is collected on every unit of the good sold. In contrast, if a tax is imposed on a good whose demand is elastic, consumers will reduce their consumption of the good due to the increase in price, resulting in a decrease in government revenue.