indirect tax, full market impact

Question 1

what do indirect taxes do

Answer 1

-increase government revenue
-resolve market failure-alcohol, cigarette, fuel duty

Question 2

different types of taxes

Answer 2

-indirect tax: a tax to increase a firms cost of production but this can be passed onto consumers in the form of higher prices
-direct tax: a tax on income that can’t be transferred-income, NI, corporation tax

Question 3

different indirect taxes

Answer 3

-specific tax: per unit shifts directly up
-Ad Valorem tax: as a percentage of good, pivots

Question 4

impact of taxes on graph

Answer 4

1)supply curve: this shifts upwards
2)price and quantity: the price will rise but the quantity will fall
3)government revenue: new equilibrium, go down then across and form box
4)consumer burden: the fall in price
5)producer burden: what is left from the revenue box
6)producer revenue: the part below the government revenue box
7) deadweight welfare loss: old equilibrium, new equilibrium and directly down from new equilbirum