Question

Name two reasons why governments charge taxes on specific goods or different tax amounts for different people.

Answer 1

Answer: Increases the price of all equally and has a bigger effect on reducing overall demand.

Step-by-step explanation:

An ad Valorem tax places a proportionately higher tax on expensive goods. This can encourage consumers to switch from expensive alcohol and expensive cigarettes – to cheaper varieties. A specific tax increases the price of all equally and has a bigger effect on reducing overall demand. Disadvantages of specific taxes More likely to be regressive.

Hope Helps!