Question

On which of the following goods or services might a tax increase be hardest to pass on to consumers? A) automatic car washes

b) groceries
c) gasoline
d) perscription medications

Answer 1

A) automatic car washes

Step-by-step explanation:

Passing taxes to consumers will be easier for those goods that are essential to everyday life, such as medicine, food, and even gasoline. However, in the case of goods that consumers are not fully dependent on, such as car washes, increased taxation may decrease demand as this type of good or service can be replaced. Consumers themselves may decide to wash their cars if the price of washing is increased.

Answer 2

It would be hardest to pass a tax increase on A. automatic car washes, because car washes are relatively more elastic than other products mentioned, so consumers would like this change the least.