Tax

Question 1

What is incidence of tax

Answer 1

Incidence of tax shows the amount of tax that is paid by the producers and consumer

Question 2

What happens when tax is Elastic

Answer 2

Producers pay more of the tax
And it is effective at lowering quantity by a larger percentage

Question 3

What happens when tax is inelastic

Answer 3

Incidence of tax fall heavily on consumers
Effective at increasing price
Tax revenue for gov

Question 4

What are subsides

Answer 4

Subsidies is a payment form the government to encourage producers to produce more of the goods. This lowers production costs and increases supply

Question 5

What do subsides lead to

Answer 5

A decrease in price and encouragement of consuming the goods and with positive externalities and merit goods

Question 6

Effects of elastic ped

Answer 6

Effective at increasing quantity
Larger Benifit for producers

Question 7

Inelastic PED

Answer 7

Not very effective at increasing quantity
Larger benefit for consumers