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econ 1.4.1 - Coggle Diagram
econ 1.4.1
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indirect tax - a tax charged on expenditure → imposed on producers by the govt. which is passed on to the consumer
advantages
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reduces production of these goods/services, and produce something else
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govt. could reinvest extra tax rev into social welfare, subsidies etc.
disadvantages
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indirect taxes are regressive (less you eaen, more you pay proportional to income)
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trade pollution permits - permits given by the govt. which allow firms to pollute the stated amount. These can be traded between firms as well
disadvantages
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difficult to determine extent of pollution permits as info gaps → market failure & unintended consequences
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governments need to intervene in the free markets otherwise merit goods will not be produced as companies are incentivised by profits so will produce demerit goods
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