Taxation

• Indirect tax

  tax on expenditure
• ad velorum tax

  tax in proportion to price
• unit/specific tax

  tax in proportion to volume of goods purchased
• elastic tax burden

  • demand is elastic so consumer burden is far smaller than producer burden
  • P1 - P2 is greater than P1-P3

  
• Inelastic tax burden

  • demand is inelastic so consumer burden is far greater than producer burden
  • P1-P2 is far greater than P1-P3

  
• Ad Velorum taxes

  • Diverging supply curves so tax increases as Q increases