Tax Diagram Explained. A tax of 6 causes the price to rise from 10 to 14. Diagram taxes on negative externalities.
Effect Of Tax Depending On Elasticity Economics Help from www.economicshelp.org
In the diagram on the left demand is price inelastic. If a government puts a 1 tax on each packet of cigarettes the legal incidence is on the cigarette smoker. The equilibrium price rises from p1 to p2 whilst quantity falls from q1 to q2.
Tax base tax rate proportional regressive and progressive taxation.
A tax of 6 causes the price to rise from 10 to 14. If a government puts a 1 tax on each packet of cigarettes the legal incidence is on the cigarette smoker. Value of cigarette duty in the uk. In the diagram below an ad valorem tax has been imposed on producers.
