Sales taxes and subsidies

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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