Market failure
A driver pays for the insurance, road tax and petrol
private cost
What are the regulations on price controls?
maximum and minimum price controls
This price control is used when the market price is below the equilibrium (merit good)
maximum price
A type of tax that is charged on incomes
direct tax
A tax that takes a greater percentage from those with higher incomes
progressive taxes
negative side-effects of production or consumption
external costs
It is charged by government on incomes and profits
tax
This price acts as a price floor (set above the equilibrium price)
minimum price
A tax that is charged on consumption
indirect tax
A tax that takes the same proportion or percentage from all who pay it
proportional tax
The benefits of production and consumption incurred by a firm, individual or government
private benefits
This good is subject to high rates of tax
demerit good
What is the purpose of charging tax?
to raise finance for government spending / to reduce inequalities
VAT and GST are examples of ...
Ad valorem taxes
Direct payment made by governments to producers
subsidies
Positive side-effects of production or consumption incurred by third parties
external benefits
Direct payment by the government to a producer to less the price level
subsidies
the revenue should be greater than the costs of collecting tax
economic
Taxes that are fixed per unit purchases on products
specific taxes
A payment made by government to certain members of people like old age pensions
Transfer payment
A car driver doesn't pay for the cost of congestion and air pollution. It is an example of ....
external cost
State-run industries are sold to private owners
privatization
those who can afford to should pay more
equitable
A tax that takes greater percentage from those on lower incomes
regressive tax
Why unemployment benefits could increase unemployment?
disincentive to work / discourage peole to work