Sales taxes and subsidies
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Last updated 2:44 PM on 12/4/23
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7 Terms
1
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Alternative names of specific tax?
Exercise tax, indirect tax, unit tax, sales tax
2
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What is the formula for price of the specific tax?
Pd = Ps + t
Ps= Pd - t
3
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How to calculate the new equilibrium for a specific tax?
Find the new supply equation using Ps = Pd - t
4
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How to calculate the new price when a subsidy is introduced?
Pd = Ps - S
Ps = Pd + S
5
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What is the new price when an ad valorem tax is introduced?
Ps/(1+t)
6
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How to calculate the value of an ad valorem tax per unit?
equilibrium price - Ps/(1+t)
7
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How to find the tax revenue for a specific tax?
Unit ad valorem tax multiplied by quantity
Note 
Flashcards (44)