A tax placed on a good or service, raising the production costs of the business is called an    .  It is a tax on     rather than a tax on income.

 tax  flat rate tax  expenditure  indirect tax 

An indirect tax is normally associated with   the level of income equality in a nation.

 increasing  reducing 

A tax is a fixed amount placed upon a good or service, e.g. a government may impose a tax of say $ 4 on each pack of cigarettes sold.

 sales   advalorem  flat rate 

When the PES of a good or service is more   than   , it is the    that has the greater tax burden.

 demand  consumer  producer  elastic  greater

In incidences where the    of a product is more elastic than  ,   have the greater tax burden.

 consumers  producers  PED  supply 

One negative consequence of a sales tax is that it creates loss, caused by a fall in     and consumer surplus.

 consumer  producer  market surplus  deadweight 

A tax placed on a range of goods and services, which is a percentage of the total selling price is called an   tax.

indirect  sales  ad valorem 

An advantage of     taxes is that as the economy grows the amount of tax revenue     automatically. This means the tax does     require annual changes to the tax rate, as with flat rate taxes.

 not  ad valorem  falls  rises  changes 

A can be defined as support provided by the    , to encourage the production or     of a good or service.

 subsidy  consumption  grant  government  consmer 

Example of subsidies include guaranteed  payments for a product, such as the one offered by many governments to     to guarantee production.  Other examples include    to help new or struggling businesses.

 grants  agricultural workers  farmers  workers  minimum 

are placed on some goods and services for the following reasons: to reduce the     of certain basic items so that they are affordable for all income groups, to encourage the     and production of desirable products e.g. education and health services or to improving the competitiveness of domestic businesses in     markets.

 consumption  production  overseas  Taxes  price  Subsidies  Domestic 

The    of any subsidy is the   use that the money provided could have been spent on.

opportunity cost  alternative  cost