#1
Im revising for my economics exam and the local library has a very pathetic economics section with very little intermediate literature.
Just a quick question for anybody who has ever studied economics. When a subsidy/tax is introduced to amend an externality, what happens to efficiency?
Of course regarding under/over consumption/production.
I'm really stuck and I've been scanning the internet all afternoon.
Anybody have a clue what I'm talking about?
Thanks for reading
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#2
I'll be able to answer that in 4 years, when I've finished my economics degree

Can you wait?
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#4
Quote by Nightmare_xxx
I'll be able to answer that in 4 years, when I've finished my economics degree

Can you wait?

Naa, exams in 3 years 363 days
#5
gah this has just reminded me i really need to revise for my A level soon...or else i willl FAIL
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#6
You actually LEARN stuff in economics? All I've gotten from my class is that Clark Howard is some kind of god and that some countries use shells as money. Wtf is tax?
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#9
In the last 2 years of A level Economics, the only thing i've learnt is that when in doubt, always put down the Laffer Curve

#10
Quote by AndyGray
Im revising for my economics exam and the local library has a very pathetic economics section with very little intermediate literature.
Just a quick question for anybody who has ever studied economics. When a subsidy/tax is introduced to amend an externality, what happens to efficiency?
Of course regarding under/over consumption/production.
I'm really stuck and I've been scanning the internet all afternoon.
Anybody have a clue what I'm talking about?
Thanks for reading
Please no spam.



well, theoretically, resources will be re-allocated to society's best interests, and it depends on what good or product is being produced. for example, if it is cigarettes, they would be overproduced because they cause cancer, pollution, 2nd hand smoke etc so a tax must be levied in order to reduce production back to the "socially optimum level" (good term to use on exams).

on the other hand, taxes will raise the costs to firms which will lower their profits, so they cannot do as much re-investment or spend as much on training, so it may lead to inefficiency within the firm. it can also lead to unemployment because firms may cut jobs to save the salary money -- this is a type of cost cutting.
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#11
Quote by metaldud536
Err.....Supply and demand! Supply and demand!!


w00t market economy
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#12
Quote by mafropetee
You actually LEARN stuff in economics? All I've gotten from my class is that Clark Howard is some kind of god and that some countries use shells as money. Wtf is tax?

Was this serious? On the one hand, you can't not know what tax is but on the other you didn't add a sarcasm smiley...

*Ponders*

Hmmm.

*Brings sarcasm detector back to shop for repairs*
#13
Just throw down a supply and demand diagram. You have a 1/4 chance of getting it right.
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#15
Quote by frankv
Was this serious? On the one hand, you can't not know what tax is but on the other you didn't add a sarcasm smiley...

*Ponders*

Hmmm.

*Brings sarcasm detector back to shop for repairs*


It's partially sarcastic. Of course I know what tax is, but Clark Howard worship really does make up the majority of class time in my economics class.

Oh, and can you take my gaydar in while you're at it? It needs better sheilding. Keeps getting interference from gay weather balloons.
Heads will roll. Throats will be slit. Blood will flow like springs of water.
#16
Quote by mafropetee
It's partially sarcastic. Of course I know what tax is, but Clark Howard worship really does make up the majority of class time in my economics class.

Oh, and can you take my gaydar in while you're at it? It needs better sheilding. Keeps getting interference from gay weather balloons.

It really got me worried. A teenager who follows economics in the US who doesn't know what tax is. Could you imagine?

And actually, I'm an expert in gaydars. Why don't you just give it to me and I'll have a look at it myself.
#17
Positive externalities yield underallocation and negative externalities yield overallocation.

...modes and scales are still useless.


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