indirect taxes

• what is an indirect tax?

  taxes that are imposed on goods/services supplied by firms
• what is a specific tax?

  charged as a set amount per unit of a good
• which was does supply shift for a tax on a S+D diagram?

  to the left (decrease in supply)
• what is a Ad Valorem tax?

  charged as a percentage of the value of the product
• how do you shift a supply curve for a Ad Valorem tax?

  Pivot to the left (decrease)
• how do you show consumer share?

  change in price rectangle
• what is the effect on producer surplus when a tax is applied?

  it decreases
• what is the effect on consumer surplus when a tax is added?

  Decreases
• what is the effect on producer revenue when a tax is added?

  Decrease in total revenue
• what are the evaluations of indirect tax?

  an indirect tax is less effective in decreasing production or consumption when PED for product is inelastic

  differences in the market - a specific tax on tobacco will be more effective in decreasing consumption of cheap cigarettes than it will for expensive Cuban cigars, as the tax would be smaller proportion of the overall cigars than the cigarettes
• what are the evaluations of indirect tax?

  size of the tax

  effect on future tax revenue