How it works (specific/unit Tax) ​

• • An indirect tax is an expenditure tax that increases a firm’s costs of production, but can be transferred
• What does a indirect tax do to the cost of production?

  increases
• In a indirect tax diagram the supply curve shifts to the left due to the increased costs of production
• In a indirect tax diagram the new curve is called s1+tax
• What is the new curve called in an indirect tax diagram?

  s1+tax
• Which direction does the supply curve shift to in the indirect tax diagram?

  left