ECONOMICS

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  • TAXATION
    • Global Warming can be reduced by taxing the use of fossil fuels.
    • There will only be a small reduction of output causing CO2
  • Its a tax which is equal to the negative externalities caused by fossil fuels.
    • Global Warming can be reduced by taxing the use of fossil fuels.
    • This increases the cost of CO2 activities and increases the cost of making the good.
      • This reduces output and increases the price of such activities.
        • Price reflects; TOTAL COST=PRIVATE COST + NEGATIVE EXTERNALITIES.
  • Price reflects; TOTAL COST=PRIVATE COST + NEGATIVE EXTERNALITIES.
  • They are an incentive for firms to reduce their emissions and consumers behaviour may change, so they may buy products that used less fossil fuels.
    • TAXATION
      • There will only be a small reduction of output causing CO2
  • There is also a cost of ensuring that firms don't pass the tax to consumers as a higher price.

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