For Microeconomics, is tax and subsidies always shown on the supply curve? I understand if its inelastic then it wont affect demand usually unless its in the long run. But for example, you can use subsidies to increase output or can't you use it to make something better. Won't the second affect demand?
Quick question regarding tax and subsidies Watch
- Thread Starter
- 05-05-2016 01:09
- 05-05-2016 02:11
Taxes and subsidies are always shown on supply curves, there's a video I found on this topic that will help you understand it better; https://www.youtube.com/watch?v=6eEohX-H3dA .
- 05-05-2016 08:49
Taxes for micro refers to indirect taxes and subsidies refers to producers subsidies. It will always affect supply NOT demand. I don't understand your comment of "inelastic". Are you referring to PED or PES? By affecting demand you mean quantity demanded?