LS11 - Taxes And Subsidies

Question 1

Direct tax

Answer 1

Levied on individual or organisation (income or corporation tax)

Question 2

Indirect tax

Answer 2

Tax levied on good or service like VAT

Question 3

Specific tax

Answer 3

Tax at same fixed amount at all prices and causes parallel shift in supply curve like fuel and beer duty

Question 4

Ad valorem tax

Answer 4

Non-parallel shift in supply curve, increases as amount sold rises like VAT and import tariffs

Question 5

Subsidy

Answer 5

Grant or loan given by the government in order to encourage production