Question

The government places excise (per unit) taxes on a variety of goods consumers buy, including gasoline, perfumes, cigarettes, and alcoholic beverages. how would you describe the elasticity of goods most likely to be subject to excise taxes?

Answer 1

I would say that for perfumes, cigarettes and alcoholic beverages the response to say an increase in excise taxes could lower sales thus be an elastic response whereas for car gasoline, most people don't have much choice about buying it even with high taxes so the response to higher taxes might be inelastic.