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Equilibrium and the price wedge

Equilibrium and the price wedge

Supply and demand diagram of an indirect tax with original and new equilibria, consumer price, producer price, new quantity, and tax revenue rectangle labelled In a competitive market, equilibrium is where demand and supply intersect, giving the original price P0P_0P0​ and quantity Q0Q_0Q0​. Indirect taxes and subsidies usually change firms' costs, so we usually show them by shifting supply.

1.2.9 Indirect taxes and subsidies Lesson

  1. A Level
  2. /Economics
  3. /1.2.9 Indirect taxes and subsidies