1. Indirect taxes and subsidies (2) Lesson aims: To be able to draw and explain a subsidy diagram To explain how the tax burden on the consumers and producers are affected by elasticity of demand and supply

2. Recap 1.What is a specific tax? 2.What is an ad valorem tax? 3.Examples of each?

3. Subsidy A subsidy is a grant given by The Government as an incentive to produce or consume something, such as to farmers for growing crops

4. Subsidy See diagram Draw diagram/Fig.3 and write an explanation in your notes

5. Question 3, p.88 10 minutes

6. Taxes, subsidies and elasticity The extent to which the burden falls on the producer or consumer depends on the elasticity of demand or supply; Look at the diagrams, draw and write explanations (Relate to figures 4 and 5)

7. Question 4, p.88 5 minutes

8. Homework SUVs, p.91 – In for Friday Reading – Chapter 13

9. So… What is a subsidy? Examples? How do the burdens on the consumers and producers depend on the elasticity of demand and supply?