The effect of Removing an indirect tax
EXPLAIN THE REMOVAL FACT OF AN INDIRECT TAX UPON THE MARKET FOR A PRODUCT.
- The supply curve will shift to the right. This will cause a lower price and higher quantity.
- The effect depends upon elasticity of demand. If demand is inelastic removing an indirect tax will cause a big fall in price.
- If demand is elastic it will cause a small fall in price and large increase in quantity.
Labels: taxation
Perma Link | By: T Pettinger |
Sunday, June 10, 2007
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