top of page
The effect of imposing a tax
The secret to scoring awesome grades in economics is to have corresponding awesome notes.
A common pitfall for students is to lose themselves in a sea of notes: personal notes, teacher notes, online notes textbooks, etc... This happens when one has too many sources to revise from! Why not solve this problem by having one reliable source of notes? This is where we can help.
What makes TooLazyToStudy notes different?
are clear and concise and relevant
is set in an engaging template to facilitate memorisation
cover all the important topics in the O level, AS level and A level syllabus
are editable, feel free to make additions or to rephrase sentences in your own words!
Looking for live explanations of these notes? Enrol now for FREE tuition!
Diagram 1 : The effects of imposing an indirect tax
When the government imposes an indirect tax, the supply curve shifts to the left from S to S1.
Price rises from Pe to P1 and quantity demanded and supplied falls from Qe to Q1.
Diagram 2 : Effect of a tax on the supply curve
In the context of indirect taxes, two main types are recognised. These are:
Ad valorem taxes, which are a proportion or percentage of the price charged by the retailer.
Specific taxes in the form of a fixed amount per unit purchased. These are widely used to tax fuel, cigarettes and alcohol. The tax is based on a measurable quantity, e.g. per litre or per packet of 20 cigarettes.
bottom of page