Concept:Tax revenue depends on how much quantity demanded changes when price rises due to a tax.
Explanation:When demand is perfectly inelastic, the quantity demanded stays constant even if the price increases.
A good like a lifesaving drug is a common example; people will buy it at almost any price.
If the government imposes a tax on such a good, producers can pass the entire tax on to consumers.
Since the quantity sold does not fall, the government collects more total revenue from the tax.
On the other hand, if demand is elastic, a price rise causes a large fall in quantity sold, reducing tax revenue.
Therefore, taxing goods with perfectly inelastic demand is the most effective way to increase government revenue.
Answer:C. perfectly inelastic demand