Test 3 idk

Question 1

Direct tax

Answer 1

A tax levied directly on an individual or organisation e.g. income tax or corporation tax.

Question 2

Indirect tax

Answer 2

A tax on a good or service. Can be specific (i.e per unit) or ad valorem (i.e. percentage).

Question 3

Incidence of consumer

Answer 3

Top part of tax rectangle

Question 4

Incidence on producer

Answer 4

Bottom part of tax rectangle

Question 5

Incidence of consumer is greater than that of producer when

Answer 5

Demand for good / service is inelastic

Question 6

Incidence of producer is greater than that of consumer

Answer 6

Demand for good/service is elastic

Question 7

Taxation shifts

Answer 7

Supply curve inwards

Question 8

Taxation causes consumer + producer surplus to

Answer 8

Decrease

Question 9

Graph difference between ad valorem and specific tax

Answer 9

Perp. distance between old and new supply curves: remains the same with specific tax, increases with ^ quantity with ad valorem tax