The government decides to impose an indirect tax on the wine of â‚¬0

Economics Dec 09, 2020

The government decides to impose an indirect tax on the wine of â‚¬0.15 per liter. Discuss the consequences of the tax for stakeholders.

Expert Solution

imposition of indirect taxes on wine will increase so prices of bear will rise so consumption of beer would reduce.Consumer have to pay more prices and sellers sales will reduce and hence profits will reduce by reductions in sales volume.But government revenues will increase but may remain same if sales volume decreased substantially.So due to increased taxes each will be affected.

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