Government intervention Flashcards
(6 cards)
1
Q
What is an Indirect tax?
A
A tax imposed on expenditure.
2
Q
What is a Specific tax?
A
A type of indirect tax that is set at a fixed $/unit
3
Q
What is an Ad valorem tax?
A
A type of indirect tax that is set at a percentage of the selling price
4
Q
What is a Subsidy?
A
A payment made by the government to firms to lower their costs of production and encourage increased output.
5
Q
What is a Price ceiling?
A
A legal maximum price for a good or service, set below the market equilibrium price
6
Q
What is a Price floor?
A
A legal minimum price for a good or service, set above the market equilibrium price
