What is a subsidy? A subsidy is really just a negative or reverse tax. Instead of collecting money in the form of a tax, the government gives money to consumer or
What is a subsidy? A subsidy is really just a negative or reverse tax. Instead of collecting money in the form of a tax, the government gives money to consumer or producers. In this video, we look at the subsidy wedge and who benefits the most from different subsidies.
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Why still lots of people buy cars and luxury bags in China, even Chinese know that the goods be charged with high percentage tax(the final price more than other countries)?
By the way the demand curve for cars and luxury bags are elastic, that means lots of Chinese should stop to buy the goods when the price even higher a little bit. But the big amount sold goods never change, is that because too many people in China or other reason, such like the government?
Basic assumption made by supply and demand curve is "everything else remains the same". Economic/financial environment in China is changing. People are getting richer and access to finance is getting easier. So they can afford to buy expensive luxury goods. If the economy is getting poorer even if the price falls, demand will also fall.
haha, I guess the rise of price for a bag from 100 to 150 will probably stop some people from buying it, but people value things differently and their trade offs are different, Some people will probably have McD.for 1 month to save money for a luxury bag, while others prefer to have healty meal everyday rather than a luxury bag.. Also for very rich people, rise in price won't bother them at all.