Problem Set 2 HW - 2 Goods that are inelasticly supplied...

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2. Goods that are inelasticly supplied are goods that no matter the price charged for the supplying of the good, the quantity supplied stays relatively the same. According to the Oprah claims the desirability of taxing these goods is great because as previously stated the amount supplied is not affected much by the price of supplying that good. Therefore, by imposing a tax on the good you can receive consistent revenue simply off the tax. By imposing the tax it will not affect the quantity supplied. In terms of alcohol being relatively inelastic this is claiming that not matter the price of alcohol, the quantity will not change as a result of a fluctuating price in either direction. These would be a good choice of taxation on a good because the quantity will not affect how much is demanded of alcohol. In conclusion, the claims of these two scenarios being inelastic would in turn make both a good idea of taxation. Ch.3 9.a.) A change in demand can come from a lot of things, for example Income rises, taste and preferences change, etc.
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