Tax policy — should taxes on colour televisions be further increased? Statement: Should taxes on colour televisions be raised further? Arguments: I. Yes — colour televisions are luxury items bought only by rich people. II. No — televisions are also bought by the poor.

Introduction / Context:Excise or indirect tax decisions should rely on clear criteria (luxury vs. merit goods, externalities, revenue needs) and sound evidence. Here, both arguments hinge on sweeping generalizations about who buys televisions.

Given Data / Assumptions:

• I claims TVs are “only” for the rich — an absolute claim unlikely to be true.
• II claims TVs are also bought by the poor — but merely stating ownership diversity does not address tax design.
• No data on income elasticity, affordability, or policy objective is given.

Concept / Approach:

• A strong argument should provide a principled basis (e.g., regressivity, digital inclusion, externalities) rather than broad assertions.
• Both statements are anecdotal and do not engage with tax policy goals or consequences.

Step-by-Step Solution:

Verification / Alternative check:

Why Other Options Are Wrong:

Common Pitfalls:

Final Answer: