What happens to the market when the government implements a tax

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What happens to the market when the government implements a tax? (Hint: think about the effect a tax has on consumer and producer surplus)
If taxes affect the market like that, then why should we even have taxes? Think about why governments use taxes, in general, and what the tax revenue is used for.

 

Sample Solution

Demand and supply are the two forces that inform a product’s stability of price and quantity in a market. In an equilibrium, quantity demanded equals quantity supplied at a particular price for the product. When the tax is imposed by the government in the market, it is obvious that the tax imposed has an impact on the equilibrium and tends to establish a new equilibrium with changes in price and quantity. It is understood that the total tax per unit of product cannot be the total increase in the price of the product, since the market operation makes the supplier pass only a certain proportion of the unit tax imposed.

struments are needed from China’s government. Looking at international market-based instruments, China’s water system may benefit from water quality trading: this is similar to emissions trading, where pollution control becomes something of a market within itself.

Rising Sea Levels
Increases on a global level in greenhouse gas emissions contribute to climate change and as a result, rising sea levels mean that the future of low-lying states and islands is alarming. ‘Rising global sea level is likely to accelerate through the twenty-first century with a rise of 18-59cm above 1990 levels projected by the end of the century’ (Meehl et al. 2007). This in turn will cause food and water insecurity, pose a threat to human safety and national security will be affected. Ha’ofa’s ‘Sea of Islands’ thesis is about the ‘resilience and adaptive capacities of island communities that leverage global networks in the face of local environmental devastation.’ (Lazrus, 2012) A sea level rise of just one metre could mean the loss of the entire land area (MHAHE, 2001). Severe beach erosion and fresh water scarcity is an effect of gradual sea level rise. Also, the increased levels of sea water temperature pose a threat to the coral reefs which support the countries tourism and fisheries.

National Policies
The Initial National Communication to the United Nations Framework Convention on Climate Change (UNFCC) was set up and completed by the Maldives. This not only highlighted how vulnerable the Maldives is to rising sea levels and temperature but included adaptation and mitigation projects. In the Maldives National Adaptation Programme of Action (NAPA), ‘adaptation is seen as “a multi-dimensional goal that aims to increase resilience of the vulnerable systems against climate hazards and risks to achieve sustainable development outcomes” (MEEW, 2007).’
These adaptation actions focus mostly on risk reduction, in particular, building infrastructure to reduce the vulnerability. The Maldives benefits from funding from the LDCF: Integration of future climate change scenarios into the Safer Island Strategy.

Global Governance
It is essential that the Maldives receives funding from other governing bodies, otherwise their adaptation and mitigation strategies would be unreachable. A Climate Trust Fund was set

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