Difference Between Tax and Subsidy
Explain the difference between a tax and a subsidy.
Taxes and subsidies
Frequently asked question
- Definition of tax and subsidy
- Importance of understanding the differences between tax and subsidy
II. Effects on Costs/Prices
- Tax increases costs/prices
- Subsidy reduces costs/prices
III. Effects on Consumption/Production
- Tax reduces consumption/production
- Subsidy increases consumption/production
- Tax is a cost for people/firms
- Subsidy is a cost to the government
V. Types of Goods
- Tax is placed on demerit goods
- Subsidy is given to merit goods
- Recap of the differences between tax and subsidy
- Importance of understanding the effects of tax and subsidy on the economy.
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