Indirect taxes and producer subsidies

What this note covers

1. What an indirect tax does to a market
2. Reading the tax diagram: the price wedge and government revenue
3. Tax incidence: why elasticity decides who really pays
4. Worked example: a per-unit tax on Fizzle Cola in Novaria
5. Interpreting the incidence result and government revenue
6. Producer subsidies: mechanics and diagram
7. Worked example: a subsidy on SolarCharge batteries in Meridia
8. How taxes and subsidies are examined and what earns full marks

8 sections · 12 key terms & formulas · 6 common mistakes