Question

Remember that when we restrict ourselves to linear prices (no fixed fees), economic theory says that efficiency is maximized by charging a higher marginal price to consumers (or markets) with more inelastic demand. Can you give an example where real world government policies do not satisfy this criteria? What, in your opinion is (was) the reason that such non-efficient policies were chosen? [Hint: Remember increasing economic efficiency is defined as reducing DWL. Reducing inequality does not directly affect economic efficiency].

Answer 1

An instance of a thing defying totally inelastic solicitation is salt . Notwithstanding the likelihood that cost of salt risings or falls the entirety human bosy requires doesn't change . So negligible usage of salt remains unaltered . So charging a greater expense for salt would be capable . Another thing is remote exchange or gold .

Significant metals are not need or crucial product. So their solicitation is astoundingly adaptable in nature . Climb in cost of gold will impact its solicitation . In any case, on account of clear use theory , o high need in embellishment creating , gold is presently and than esteemed exceedingly or is exposed to esteem division .