[hakik]

Suppose the government is trying to balance its budget, but needs to raise taxes so that they can cover the amount they have allocated on infrastructure expenditures. The government has decided to tax both gasoline and diary milk, but legislators are uncertain which to tax more heavily. The government is also concerned about minimizing the deadweight loss to producers and consumers. If the elasticity of demand for gasoline is -4.5, and the elasticity of demand for diary milk is -3.2 which product should the government tax more heavily?

[paraclete]

Obvious they should tax gasoline, there is more of it consumed, it has little to do with elasticity of demand but the reality of the size of supply. You cannot make such decisions using only one criteria

[ma0641]

They asked you this question, what do you think? Do you know what elasticity of demand is and how you determine it? What does the minus sign mean?

[AtlantaTaxExpert]

You seem to be getting good response to your question, even though this HOMEWORK question (which, by the way, we are NOT supposed to answer on this forum) is NOT a tax question, but one of Economics.