indirect tax and subsidies Flashcards
1
Q
direct tax
A
tax given directly to government
- income tax
-corporation tax
2
Q
indirect tax
A
tax on g/s
tax given indirectly to government
-specific tax
-AD Valorem tax
3
Q
specific tax
A
-supply curve shifts vertically up by size of tax
-fixed amount of tax paid on each unit sold
4
Q
specific tax - incidence of tax(diagram)
A
check notes
4
Q
AD Valorem Tax
A
tax charged as a % of the price of a good
-VAT
5
Q
AD valorem tax diagram
A
look at notes
6
Q
taxes use
A
- generate tax revenue
-discourage production of harmful goods
7
Q
subsidy
A
grant from gov. to firm to increase supply
supply curve shifts vertically down by size of subsidy as producer can sell for lower now
8
Q
benefit software subsidy (digram)
A
look at notes
