Government Intervention Flashcards
1
Q
What are the different methods of government intervention
A
- Indirect taxation (ad valorem and specific)
- Subsidies
- Maximum and minimum prices
- Tradeable pollution permits
- State provision of public goods
- Provision of information
- Regulation
2
Q
What is an indirect tax
A
It is a tax that is levied on goods and services
3
Q
What is a specific tax
A
It is a fixed amount that is charged per unit of a particualr good, no matter what the price is
4
Q
What is an Ad valoremt tax
A
It is charged as a proportion of the price of a good
5
Q
What does a specific tax diagram look like
A
6
Q
What does an ad veloram tax diagram look like
A
7
Q
A
