Question

40. What is the effect of an indirect
tax and a subsidy, on the price of the
commodity? (6) *
G​

Answer 1

Answer:

This is your Answer..

Explanation:

Indirect Taxes increase the price of goods in the market whereas subsidy reduces the price of commodity.

Answer 2

The effect of an indirect tax is that it increases the price of a commodity. The effect of a subsidy is that it decrease the price of the commodity.

Indirect tax is the tax that is levied on goods and services whose burden is passed on from sellers to ultimate consumers.

In general, as the tax charged by the government increases it ultimately increases the burden on consumer's pocket. Therefore, increase in indirect tax increases the price of goods and services.

Whereas, subsidy leads to increase in production as the costs of production are reduced thus, it ultimately will reduce the price of the product.