lesson 10- tax incidence

Question 1

what are direct taxes

Answer 1

taxes on earnings
-income tax, national insurance tax, corporation tax

Question 2

what are indirect taxes

Answer 2

tax on spending
-VAT

Question 3

what is progressive tax

Answer 3

a tax in which the tax rate increases as the taxable amount increases

Question 4

what is a regressive tax

Answer 4

you pay more as a % of your income,the lower the taxable amount
-VAT is the same foe everyone, so for a low income person it is a higher % of income

Question 5

what is a specific tax

Answer 5

a set amount of tax on a specific good or service

Question 6

what is ad valorem

Answer 6

expressed as a percentage. For example, VAT is charged at a rate of 20% in the UK. A 20% ad valorem tax increases production costs by 20% at each level of output,

Question 7

draw the effect of a tax on a S and D diagram, with
-unitary S and D
-elastic Demand
-inelastic demand

Answer 7

https://www.google.com/url?sa=i&url=https%3A%2F%2Fwww.mrbanks.co.uk%2Ftaxes-subsidies&psig=AOvVaw23I42Kh-SQzjwKB6KV4ESY&ust=1737139460181000&source=images&cd=vfe&opi=89978449&ved=0CBQQjRxqFwoTCLiN1fXy-ooDFQAAAAAdAAAAABAE

Question 8

draw the effect of a subsidy on a S and D diagram, with
-unitary S and D
-elastic Demand
-inelastic demand

Answer 8

https://www.google.com/url?sa=i&url=https%3A%2F%2Fwww.ezyeducation.co.uk%2Fezyeconomicsdetails%2Fezylexicon-economic-glossary%2F703-subsidy.html&psig=AOvVaw1I7ebZvEOlRE-omnSaKPqj&ust=1741079386855000&source=images&cd=vfe&opi=89978449&ved=0CBQQjRxqFwoTCLiShKjI7YsDFQAAAAAdAAAAABAE