- Explain why governments impose indirect (excise) taxes.
- Distinguish between specific and ad valorem taxes.
- Draw diagrams to show specific and ad valorem taxes, and analyse their impacts on market outcomes.
- Discuss the consequences of imposing an indirect tax on the stakeholders in a market, including consumers, producers and the government.
Next, as HL students you need to be able to determine tax incidence and the effect of price elasticity of demand and supply:
- Explain, using diagrams, how the incidence of indirect taxes on consumers and firms differs, depending on the price elasticity of demand and on the price elasticity of supply.
- Plot demand and supply curves for a product from linear functions and then illustrate and/or calculate the effects of the imposition of a specific tax on the market (on price, quantity, consumer expenditure, producer revenue, government revenue, consumer surplus and producer surplus).
You will be given some resources and tasks to do and here is an additional task: