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Economics 1.4.1 - Coggle Diagram
Economics 1.4.1
indirect taxes
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if demand is inelastic e.g. for fuel, demand will not change much even with tax
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purpose of intervention
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governments get involved to correct market failure, improve economic efficiency or change distribution of income and wealth
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stakeholder = any person or organisation that has an interest in a specific project or policy decision
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minimum prices
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demand for addictive goods e.g. alcohol, is likely to be inelastic so demand is not likely to change much with price
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regulation
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costs of regulation discourages small businesses and less competition in market discouraging innovation
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trade pollution permits
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cap and trade scheme
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uses the market mechanism to change relative prices and the incentives of producers and consumers to reduce their carbon emissions
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makes it more expensive for firms to emit carbon which increases incentive for investment in low carbon tech
vertical supply curve shifts inwards as number of permits is decreases, causing a contraction in demand
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