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Economics 1.2.9 - Coggle Diagram
Economics 1.2.9
graphs
taxes shift supply curve to the left
subsidies shift supply curve to the right
tax is shared between consumer and producer
tax is shown as the vertical distance between the pre and post tax supply curve
the more elastic the demand curve or inelastic the supply curve = more burden on producer
the more inelastic the demand curve or elastic the supply curve = more burden on consumer
subsidies are shown as vertical distance between the pre and post tax supply curve
reasons for subsidies
reduces inequality
raised productivity
encourages output for goods with positive externalities
increased training and employment
stop job losses
indirect taxes
impacts
might be regressive on low income families
people might switch products
risk of lost jobs
higher costs and lower investment
taxes on spending
ad valorem = % of amount of good
pivot
specific = set figure
fuel tax
sugary drink tax
parallel shift in supply curve
impact of subsidies
more investment
more profit
more innovation as more firms enter the market
put a strain on government funding
reasons for taxes
government can spend revenue on public welfare and infrastructure
redistributing income
correcting market failure
can be used to change consumer behaviour
drawbacks of subsidies
producers may become reliant on them
distorts resource allocation
surpluses in production
expensive to the tax payer