Answer to Question #121463 in Economics for Bennique Jones

Question

In the uk each household that owns a television pays compulsory levy that is equivalent to $233 per year. The total revenue collected which is over $7 billion annually goes to the British Broadcasting Corporation
Do you think such a tax is likely to have a likely substantial excess burden relative to the revenue collected

Answer 1

If television is a service with inelastic demand, then such a tax is likely to have a likely substantial excess burden relative to the revenue collected.