Taxes and Subsidies Flashcards
1
Q
What is a indirect tax?
A
Tax imposed by the government that increases costs of production faced by producers.
2
Q
What is a specific tax?
A
Set tax per unit, e.g £5 tax per unit sold.
3
Q
What is ad valorem tax?
A
Percentage tax, e.g 20% on unit price/
4
Q
How do you calculate disposable income?
A
Income - Tax
5
Q
How does real disposable income differ from disposable income?
A
Takes into account inflation.
