taxes and subsidies
- Created by: ishah
- Created on: 11-05-13 22:03
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- taxes & subsidies
- gov uses to correct market failure
- social efficiency - no waste
- tax - g&s - overvalued
- tax indirect
- subsidies
- free market under-provide
- MPC=MSC <- ideal
- hard to judge how much to tax
- indirect tax -variable costs ^
- specific unit tax - parallel shift
- ADvalorem tax
- VAT - size of tax ^ with price
- tilt pivot shift
- VAT - size of tax ^ with price
- burden of tax can be passed on consumer - PED
- encourage production positive externalities
- howev's whos winner&losers
- subsidies may encourage inefficiency
- howev's whos winner&losers
- gov uses to correct market failure
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