3/22/2024 Economics Lesson

Why would the government want to implement a indirect tax on a product?

• Discourage consumption of undesirable and/or dangerous goods

• Make life harder on it's population.

• Because it can.

• Encourage consumption of undesirable and/or dangerous goods

Color in what consumer and producer surplus would look like on this graph. (Label which is consumer and what is producer surplus.)

What is the definition of subsidies?

• Subsidies are funds provided by individuals or businesses to the government
• Subsidies are investments made by the government in foreign countries
• Financial assistance provided by the government to individuals or businesses to support or promote certain activities or industries.
• Subsidies are penalties imposed by the government on individuals or businesses

Draw the change that would occur when the government creates a 50 cent subsidy for corn.

Draw a product in equilibrium, then add a tax on the diagram. Make sure to label correctly and show p1, p2, q1 and q2.