1.2.8-10 - consumer and producer surplus, indirect tax + consumer behaviour

consumer surplus

the difference between what consumers are willing to pay and what they actually pay

producer surplus

the difference between what producers are willing to accept for a good and the actual price they receive.

tax

discourages the production and consumtion of harmful goods

ad valorem tax

a tax levied is a percentage of the selling price

specific tax

a fixed amount charged per unit of a good or service, regardless of its price.

excise duty

- an indirect tax on goods and service

habitual behaviour

where consumers persist in acting in a particular way even when conditions have changed

incidence of tax

the way in which the burden of paying a sales tax is divided between buyers and sellers

indirect tax

a tax levied on the expenditure of goods and servieces

nudge theory

analysis that suggests peoples behaviour can be influenced by making desirable decisions easy to make  

specific tax

a tax of a fixed amount imp[osed on purchases of a product

subsidy

a grant given by the government to producers to encourage production of a good or service