Explain the Difference Between Forward and Backward Shifting of a Tax

question 64

Essay

Explain the difference between forward and backward shifting of a tax.

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Definitions:

Total Revenue

The total amount of money generated by a company from sales of its products or services before any expenses are subtracted.

Price Effect

The impact on the market when there is a change in the price of goods or services, influencing the supply and demand.

Output Effect

The change in total revenue resulting from the production of additional units of output in a competitive market.

Jointly Maximize

A strategy or action designed to optimize two or more objectives or outcomes at the same time.