Question

Assume tomato has relatively inelastic demand. Explain why a sales tax on tomato is NOT an effective way of raising tax revenue. In one sentence.

Answer 1

[AI-generated answer — Bot GPT 3.5]

A sales tax on tomatoes is not an effective way of raising tax revenue because consumers are likely to continue purchasing them even with an increased price, resulting in a minimal decrease in quantity demanded and relatively small tax revenue generated.