* Need of public sector afte of public Sector @ Market mechonism alone connot pertorm — — aN eronomra jsunckions » Public Policy IS ——eeorne ree necded to gutde, covvech ( supplement it- Sir 8 ® Government is needed to ensure there 3S is wo obstecle bor tree entry 6b congumer g So CS ene & bivms C boy pevkect competition) ® Needed oheve competition is intbbicient due to decveasing cost @® Conhrock_enbortement © Externolikies smavket bailude + tors ubsidy ® Weoith distribuh’ on . ian ® To bring price level stabiliky) 019 4 ~~ Fociolly desived growhy ve situation employment & u sole 4 eae deg WEY * Major bunchions ob public secloy @® altocetion bunction Chree Videw problem ) proviston of social goods . (non vival There (5 No Wolunbory poyment hence lnkoge ab produces =. men consumer ig broken: 9° ajovern needed non excludeble) « on excita ®© Dissribution bunction Distribution o& imcome meg vot be socially bolr Louth te hae with me | tomperitive backor price as wel) shoul be acreptoble Loust - emer e e jl Scanned with CamScanner9 1 Th involves ‘Value. Sudlgement « THis done hy ® Vor \vonsber ocheme (progressive Jorotion + @- Satis subsidy do lower income people) ® Nigh tar on good puxchosed by high income & tet subsidie. Ao goods purthesed by lower income group @ Stobilization tunchion ® Employment @ Prices | © growl rake @) wer Role in Case ob unsroble enyyi Vitor en" Colbuothb model % Public goods VS pavate goods PD ea) pda Rs Ja © Excludobility — Possible to vesbrich to avoilobality to etlected usevs on Yoo hosis ob price @ public goods . debence service + ore S bor ib westaiched vo only these whe Ppey @® Pivol when good is provided 40 someone ovoilabilily te others ove Now | evclud able “T) Con nor be ib veduers its OP OPLLETETIT PTT EPI IS IIS IIIS Scanned with CamScanner 23 666 66 6 ir S ir b> ioe ie ed y @ SEPT T TTT SES Public good is hon vival 9° debence strech light @® Puve_public good hos me zero ov close @© Public good is Weely to hove clecyeas ing Ae Seeiol good & movkek bailuve Market con bunckion only 19 situation Obed exclusion principle apples: Marke} Kailuve clue fo non vival Consumption Als consumphion do vot obkect Bs consum- ould be Ty such Cost exclusion wwoule -~ nts Tk mero Yhen price =o - stveetlignht ches’ rc asuTes 4 non exelusol iliby Moy ket jeollure due is.v's wiva\_ but not ex clud able in aiy poll ution py evenhon ey Consume tion | such ae anew sion ynough “appre priate is not beostble - oy Gowded sbyeek dering yush eur Scanned with CamScanner,o 23,4 con be Howevey Wie Coslome, fo vse 1 boy eoocs oe Prsal Nobuye’) e © * Mrevision bev Sacto! goods © a P GHz OFTOg) Pf ome c eo c c ¢ c c O¢ GH a. ¢ ‘ priveke good Social good : Hovizentol addition Assumption — Consumer ok demond corve Marainol benchict 1s eval bo MC boy enh individual ay eee Sion] Feasible | ton veeaihie Pprivabe good coled $.$.3-$ Soi on ¢ soctol good ore willing \o veveo\ Aneir moro nal eyol\ua\inn Sov socio’ 400% Vern de addition, (vertical addihion Ob price boy ann quomty) - Scanned with CamScannerAs in cose keasible & tensumplion Consumer prekeventcsS be vevealed voluntarily A political process \nevebore used Yo L Fo ternish * ob poy box Ahem. , uk x Mixed goods ternal benebits is ok bov such goods will nok obtain yevealabion social good exclusion Is nol non celval nobure, (show consumer benrkit) mush be ob prebevences iscal Yesouyees needed to Tr consumption ot good abbecks lav ge Rumiscs) OH ROROO. cConsumey, horgoining does not work & Consumer budgetary process agen needed Dp — Marke} demand turve Cobtained by hovizontel odditren) Dx - supplemen tne evalution by others Lenekik generated by thes hax y schedule rekleching bboy eA) © ackivilig Cobboined bY vertice sum) i j Scanned with CamScanner@ St — denote Sobol bencbil Cobboined by Vevlical addition of py L Bp) Given aikuslion privake marke} sill Consume Ctp amount ob aoe While socially clesived fomsumplion is @> In oxvder te expond PLLEEELALELELIPILLIIR PSI SSIS SSS % oulpu’ So as Jovermmen) should poy subsid Equal to & Dy. Moke: for e veveoling Dri political process is needed. In puvely market good Ds is same as rp &£ In purely socto\ geod as become equal do Ave Px, x External Cost ” ox “D - Miet demanal production 6 achivily way fnevole cas) adhich is neithey poid by consumer MOV Procducey 29. pollulion Sp- Supply schedule Be - external cost. 5S) - Sprse ice total cost outpul while movkek pyoduce om on is desived wmpes€ say TR = 6 Governnment mop tmnt . Sede yoducey. Lyaise ’ to drop AANA Curve bo DH supply curve: Oy impose bart ON Consumey Scanned with CamScannerxy * Borgoining _ ~ Evternal bene bit & . Show consumer SY lug» No one % Will eager to porchose C See arerh ok soclol bd good with verticol aaldibon) + Eventvelly ~ Someone will move b rheve wilh be ~ xesponses , but ik is Uncertain whet yesulh ‘ Will be- Cost shave in binal quontity met ia be déviclead. He EE depends upon the (e beygoiming power . However there {5 72 i Yeason lor consumey to yeveal thei f preberences & moke thelr contsibubion Ls Ta such cose politicol proce become wnecessor ———. rT oe SOT TTT SE ETE &. by ternal Cost yges cotHe uwohich Seay Rancher R YO pis lond-& clomogyr4 srroy onto bormey In the obs ence ke en vequle tion © Gxt! either e€ i ° hew mor gine 7 caval ya Bee net ynes cost OF : ~ oy poyrest— be eB wil do 30 " M morginel loss veducing herd eguols } @ veceift. vaor gine gain rom Aomes ani Scanned with CamScannerCoose theorem When there is conblicking property sight, involv eel bargaining lbttween the pavties imvol¥ce will lead to on Heicien!_outeome_veqovelss Which party ultimately awarded property vighk 56 long og tYansachion costs associated with bor aeining ave Neg gible . ebbroient solution eee nh on, Was Yeoched without public inkevvenr pe some alarhher Tn Yanching case Moveovey ovttome will Wheothey O There igs no low & FE hos to POTK ® low protech © & RB mus} poy & fo secure Commissi 04 a ee Ahey dither in distribubionol term - __ LALILLLLIPiTiresrrs see eeee & 4 “1 Scanned with CamScanner™ * a» Morker provision ob non sivel goods a Monopoly & Price discrimination Congestion = — quolitz ob learning decveose class size increase a as ® Spatiol limitotion oF benebit @ * Taves Foxes ove amount withdvewn brom the private with 4 sectoy without Jeoving the government Viability te the pert * Approaches to tox equity BemoebUmEsaciBlss would be fored mm Vine da bor public Anus depends Each torpor ev ov hex demon with his Seales ye tox Bormule tern , Move speci & price The appyve pric upon the prebevences pa bically it depends “por elosticity of socio) ood & incom & A - a oY = FY Ep 4 Lebt s1dé oF equation express ThE elosticity oF Aen price wih income. e of he p both chong Te elostreiby equals ! & yatio ob Tor WMtome some percentage vate Scanned with CamScannerYemoin constont. | HIfy im Vowjer Yen \ Ave vali . : ; Nalio winex 4 dor is Progvess ive in nobure Te fy le ts leas thant toy is veqvess ive ve with elosticily approach ye a! 7 ee © Arvo price & income elaslicidy is wok Known ov Yeodily derived brom mer eeh obseyvalt on 45 in case ok probe goods ® Wey wil dibber Ormong various public sexvices. - Methods © & fee, usey therges ov bolls © Iw View ot chorges &) Tax on gasolin ‘ov highwoy a eveloprne nt : @® cess \inkeg¢ ot @) vYobing on pay ticuloy Neate Wiky specibicd evpendilure votes Mey help to veveal packevences e a HAH 335444 9008 b> & HERE Soh) a "Te ? ot ak , Scanned with CamScannerPROT Ee bbe eee er wenn - * Aviity to pot People should Contribute in line with bhely obilihy fo poy Norizontal equili — People with equol copacihy to poy the some Verkical equity _ pitkerent amount ok tor to be patol with people of dibberent ability TT ct wr A rn 8 ag a Rg Woge 100 100 100 100 \o0o 106 Tot to lo 0 a lo = Consu qo ao 7 qu Soving, ie - 1oo - sl - 4 iment 2 4 - \o 2 4 ter = oq | WV tons _ - 44 suing eM IT etl srlwlo 1940 | 10 Ti woe Preset 10 10-82] lo Vatut _ 10 \o lo B pay mort fox I TT appreech ° prion hon approach gives ir place some potential consump rion Mne bair Consum : buyden oO soluyion sinct geople with ajuel Scanned with CamScannerA Mewicol equity ty tery 467 Tou poyre treoled oguolly 34 ve oe werbor coment involve equal lors 0% ; Asya 1” pre e LI cre Scere nS, Cea aa Trheome bekor bon of lowev meeme (LT) 160% L Tigher income (az) is 08 6 Toko! Uvilily of LE - orm wotel UENIY oF HE ~ oaltn! ibe ZT pers Under absolute socribice Lr P | tg! th thet (e while WE pee ce 3u cl ptoe - cave an sign dor Wabilthy cons wey 46 TE MU wey ove ween white under ae 4 45e with imcom Vby wausd “56 azovar bv - 0 3ing HY wuss erPrrrDrDQ2 92D VHOFPF HOM HR MOM HM HO HOM BOBO DD A yncome « Viebt hor : e € Scanned with CamScannerPosbielly ole & ok mus wd income debermines it vey proportional oy vers tor ig progyes } Proportional Socriblee 4 : ‘ 5 Lwil poy PR eH wi) poy 98" 3 a [a La 4 owen OB a! 3 declining gut styeight line MH calls kov 2 progression. y bak genera aorion becomes divkiculk A ib mo schedule Jeall oF a ecveosing, vate Moraine 3 acribice @ oa toe elal “4 rf Laon Ayres tae income ove equalized ot OF FO é . <3 sy miuge were comskont, he distributer = oy fon bill Would bE snd thermine FE nor Ale bov ws tn least total aacri | applied se 03 te lop ob incomes Brom | | TELE = yop to down pteoving elt Mess — aS call Bhesg we — those who POT dey with vol morgine sacri kice 2 Yt ene wok wecessorily , including atl +O% om oup Equal rmorginel secivice vue Wer be See pea ereo mvc cols meade Bocywice to be MMimum) yorher then as an equity Yule! Scanned with CamScanner RRERAic) 6 $ ° ” pitermotive foncepk Ob incidences iecidences © pusoiute bor porticulot 3 other +O AD. er econerey in wk) gs mey \eod to chongt hhente wo declines De pending , declines * 4 \ : uwrewoleyment, Vebleher, a promo) Lotel output oo roy veducet the 4 % PET IIILISIIII LN Ltt 4 Te 29 Nor holding public yes constont- Avis declvac olion , eke. Scanned with CamScanner 1anaggBoth yesult will hove distyibubionol implications Which con vot lot sepovoted brom tyose bor Chonges ieselk - Diby eventiol bar incidences One fox is substituked boy anothey while kh expendibure held cons kent 2265 $3333 x Measuving incidences Measuving inelaences Disposable yeal income = B-W . DY Pt Ts ap e- eamings KE A DPT ~ income box PTH WRAY Price po vor PPPePEee? Soles tax TS Y otal So w equili bYiu my view oF product faxes bw Af fh | He ub ni an IREREEE a unit Panes lek say u Wh Unik bor is imposed. ence supply achedule vise fo $s). Zt Pesulls into Golling quanibty bougnt be OL: Movker prices Vise to oF be cost bor atiley is Ok: Similovly tor con be Smpose on consumption which wil) veduce vesull tn the downword sbibh in Dd CurIve - Scanned with CamScannerAdvalovewm box — perce toge oF prices i done) HO GL/EL ( Vox = 6 bax] net prices \ ke bb by seller & Pole of demond & supply elashi ee 3) supply sche dude 4 Is jess elashicn & S » es Supply schedule is move Po 4 6 eloshic. j The less elastic is Gnldine ois ee 5S gu he \ess 0 4a, > Q Will be vesulkin vise in >i demand (urwe is Ness eleshic Ahan >. The less elashic is dewond the greater will be Vise iM price Aless will be Scanned with CamScanner& & 6666 ¢ “Ff FS Fa eo PESEEOEELSG di df & VOCED EES ? Abhes u tor quontiby boll by fo @, & rq price vise to OF- F Tay burdens wxquortity 0 s Aveq FOLK o Oubobk whieh Ittng B - ayided wi be shoved by tne perdew ok tony bebween Consumey Lo BHLEK will ey L selley 46 05 Abe be shored by the Yatio ob elosticity ob supple v Supply to elas bidity ok demond . in HE ot demon at relevant yonge & supply schedule - vot yovs 0 Burd Buyer Closticity SupPly urden (By _ flestictky Supply Sn) elasticity demand will be progressive bile Tores on \ururits be Veqressive- Amey on necessities will es balls on selleY, extent that burden ion ob devived iy product vedured & house- To the ba ckoy envi? ke boxed produch ore 4 ida o¥ holds ave obbechect brom source Be ° 5 - ocrhus ib the proave Aneiy account Ane skilled wovkey 37 5 will be distri buted vnolds 1% vequives highly deckne in earning progressively , Wheres opposite UnokilledA laboy is ‘inwolveal . Scanned with CamScannerimposed one 4 Aterond W444 fff Hours PMS worked boll Nove Brom oc to of & gross + ise byem 68 te of The cecline jq bf wed us fone sole (ie BE) bolls shovt oF the day Pee workhour (ov -tk) ? 2 a HY Similorly Uwe con show case of Capital yond, i ce a Tr cose ok land Wwe bind supply ts braced | With supply totally elastic inelash a» come devived brom land depends upen dew aon a only i he neg € nt aye eusislen Folls on land KER total by Flot yate tar will pose progrvessive buvden disivibuhon , 1b eormings byom fhe bared a peveentbage ob infome G Ps backay Vise as When moving UP INfome scale £ th will be Veqressive ih oppossile is case Scanned with CamScanrisr- eoeecece vo 6&6 ¢66400% 6 SOOO T * Tresdences in gerald ropulilsiven ss vo - * Produck loves Psaume PC Eb tech an eller caved @ vemond boy olnew product is subsech fo intreasiang yorse Aber price, uphite : oh tored product. “Thus Brom Uses side will be f 7 a {Tk peod pond ik ut lous ing thet Ave buivden apered to Consumey ob other product @ hs ovtpul_ mit chovaes devised 3! ok production + en toved produc 9 hk substilute 1% \ebor zy will ncveose acc x Fadoy haves OG) Ase supply ob bexed ba daved ‘elles chu velolive seoveity © Ns a vesulh hoctor declines voll walt ob veluins ceil! L Tar on one baclor @M no the prifes of prod dtow Weovily vpor hhc preiy consumey Wi wVaty Jo subslitu As (ney fend product? phe Pryce of’ will rise - nom. \rov varie” ps0 dort 5 backers coprtol nvewsine intensive \ ura ok = \aber bec tor t other pueiy shoved by other uch whith hove d tochor 1) be burdened ye other such product Scanned with CamScannerPC EDV—L——— * Tmobile bachoy ee Ce In such Case tox will be capitalized & Come +o be vebleckedk Ina veduced value oF toyed assel- —— Arynvol Income Pva = PYE = 2 HF inteveyt vob if B® tax js imposed on A then Pye = (@®) U4) ENCE i wyalized L hos Tax on A hos been Capel?’ (Tk one wishes to PPR PPP TTP LP veduced its value: sell asset labey ony biter will Par veduced price) A Mobile vackoy (sey Covporalion ben) Re Capital wil move krom Je Covporote te obey seckoy Where fox does nob opply Hence im deere Corpora te sector ovtpyt bo the gy0ss wake oO yebury LARARGS LS will well e on yemolning copital in corporate sector ~| will imevease. The oppessite develop - . ment will Sake plece in tax bree * seckor & eS e& & & e Scanned with CamScannerem 4 Boeeoeoedceé seo SS SS Se a a) ow w& GOs u ®VEUUIIIITIT yo}r oF yebuyn ¢ Oop Oo vole ob veKUS e = Pr KH D> Amount of Oo mG Rynount of x copitot y Copirey bekove bay schedule co R¥her bay schedule - E> OH is Vavested in X & om is invested in7 akbey box Capitol will move brom x to invest ment in capita x Awol of 4 vise yi OL yeburn on both the bal] Fi ok & (such that net seckor ig equalized Scanned with CamScannerx 1 vheck mavkebs product dae Unit tar & tne MO sth PIII G Upword to mc! Gutpuf balls 49 0% & vite vise to B2 Avontit, ann rps sores under rnonopely 9% } [ee pet pet Ouipur A pry ec which : © ive movimum provit without tay poi still © pest positien o¥tey tor is vmposed Tonopolist ab sovks al tne bor & manwizes Probl (Tar absorbed bt protit} wees sail) —axe—ah Monopoly However in yeollhy tones ' do vol set highest e BEER E ESS possible price sin this Chyeor of competion) Pe es 5 foxes moy be ghibicd Fo Consumer, Case r eS 299990" ‘ Scanned with CamScanner "VEEKLLSLeEOKEE vee Ja pt pa se me é ry a7 Ts Pratih bos instioly TPR Cet to O8F Urde«s provit mnori- wisatrien output is a6. with probit OO”: Let soy vu toy is imposed on F avorkit, Probpr L hened STORIE pore shikt downed to Ot'F web moriwiacd probit tay b be Aber $b boll to Ge Gs peawit sr pales morinizetion with constrained bebore tox biven ooill product toy gubpub is cur Fo OL sik probik yeyoln & ok they originol vevel b kor te bully shitted- Cgyvoss probit Vine, to LM) Tn cose hoy unit be soles maximisation eee sales ob pure obeowbed by tHe erovik y Scanned with CamScannerwk Toves & othey cost © Adminis ty \von cost adminis rev VWead lor is cheaper bo a. ig cheopey Vian soles tay A sales Lew dnan income 4e% @ Compliance cost There ave two options cithey by tuveakening oa hi ghey penalty ve FRS obbender is Caughk ov by spending more on enkorcemmr so as FO increase prebobiliby ob being caugut © Excess buyden oF exis bow ee ee eee wevenuc excess burden aA curve with samt lesser then deme Gen is ts velakively inelastic - 7 Scanned with CamScannert Pee cece emcees eee nee re wet ~ «0 i r 3 I I 3 I Freess burden L loud vent I yeah a I I? ‘ : med : quewkity ° WwtwTn ve toy absovbed by vent decrease 7a Extess burden is absent wheveaver isolated ocuk 45 a bese in eel practice to determine involved. ue Con be e Howey ey bre amount of surplus Eacess buvden £ chotee perween Present l kukuyt co” sumphon similorly be or Hage - ed on evbernal 2° mmrereyt Tare above analysis Alkey kor mPOS demond balls. MT Scanned with CamScannerx Revenue £ excess buvalen — ie a ‘ \—_____— .. ° quowli ky cevenue bia} ; at epcod weigar 899 Yisey L they “ bolls - ¢ € pevenue é € ¢ ° Tar yal < é € x Beonomic ebbicieney b tare) f duct € Choice omovg prone 7 e € € € € é & Ca Tu case ot lump sum tor of An) Te in verte o | canned with CamScannerWhen selective tor Sey only on x is applied in that cage price vatio will be Chonge Price lime chonge Fo OF & Consumer ein Yeah at TC ig. Movement $vom ia 49 'y reblecks excess buvden. has Income etbech only L subshitubion General fox hos 7 while preduct tex nes Tooth Income SSI 3 ered B “~ ~- 4 * For leisuve 2 income some omcly sis 4% we done in the micyo. Fer Progvessive tay Show kinky demand bunchion. ee &o& chorce between present & butuve Co nsumphior 1 o » bov Ce ere dai) = 04 (wer bicol axis of current cons um prion) e & ve present % ¢ ow a Conclusion With income & sevi bived 6 & ° a dead weight loss & eneval Consum- phon tox imposes 0 is superior +0 selective consemption ta* © with income h choices Lebween consumer a a re en eis prebecshle fe Wreome toh prebevable te Income 40) which by toring Cepitel incom® distorb the choice. ber prescut L butare consump tio f choice bebwcen Consumey gooels yucome & consumption Yar belween meme & leisure. | Scanned with CamScanner ~ © wilh seving constant , both Aishork the choice TOTO*& Oplhimol dovadion —ee==-_— “Tw ordey Ao miniynize, tne ode) e900 %% burden , we Should thevebore collect Abe vevenue byrom Abe Suv, doves Go 0% 40 equate oie er less burden yenposrd by Khe tosh dolloy ok lar on coc producer. an 4 & 7 aay witl Camecanner1 »* Bhatia di ke public binonce ke Nuske Bhatia Ji ke public Binomce be Muske _ , A Tmpure public good [quest public good / quasi Privake good pisture ob Chevackevistic ob both publicd ' privete goods Tk publicness Chovache® ' pecclominate ih is public good 0 rhe ed ise private geet : * Titbout ~ Ootes Model There is sub cabegory ob public good which is vestricted bo people living in ° opecibic_geegvophie_aven_boling within jexviro vial Sori edigtion ot local best bo be non- vive! but acquires exdludabili ty. in Mah area This Good continue chovackerishic oF wet Every peysen yesidin ad to contribution . problem +d compulsor 7 yidey problem” Tho se a ove, at willing $2 eail tak 2SS yate to other OOS Cvoting beet approoch ) io subiecte convert bree We wider * con mi with the Assume riors @ eerbeck iwakormation L bree mobili tf to choese @ novgh oreo & commmuni hes eae (services not vevisea aver Hi oe) ttom ® Coshess. @ Quality oF public sertic _mnigrolien ¢ Some eVErz whe re Scanned with CamScanner- # Club Goods e ded with bull ev thudabilily gy Public gooss embed Vik eo binancial Exclusion is based on criberia . . aocia) Lon\ribelion , prokessional a wali a \icotion , slolvs, veVigion. ef o. es Aivlinets club membership which othey Sepavate Check Kine . PPPPR RAD A Merik goo which but also p —_— Those gords Ve consumphion ok ho} only benebits Ineiy fonsumey Won consumers Coppessite om good) ey+ Education, verinalion EP a Constraints of public services O lock oF Yesouvers ® Adminishvalive machmery Moy nod be raOaan pt a ae fe ekbicient ® low produclivity ob public expendibire ge © Choices ok sevvice deeply intlueuced L by seciol 2 pelitical considevakions eT jm ob bunctioning A Public binance isa study OF SON on oy public. byeosur d= = 999 Lebethenbenth > i es ———§eanned with CamScanneis Is ” * Princ al ob moximum Sociol advontaqe Th answers £O On imPortonk question," what should be size ob government loudget 2" re The criteria L pre condition bor arriving oF Yr soluhion which achieve moximum wet tee Social adventage Known a3 ye principle 8 ok moximum serie) edventegs I ooh ) WY : $ went got \ 500?) cool a q % 500 ory” r {ost we ° 4 ° he 3 a be i morginol disubs iby yore Forabion, amount ob BY favation & public trpendilor: med mevaginal socio) bench’ i w por sme it , es ophimum sizt oe Govermnmen expends bure ys om q wo HA Assumptied @ pesourees of stake ave only in town ob Hoy evenve State docs wok voice obebh v, @ Tox veceiph subseck to increosiny, morginel_setiel disuiliy © selonced wudgrk a @ Every (03s L ann yn socieky 1s measuvaslc ab oluke Xe“ 3 cee bh e EER He Scanned with CamScanner# Umitebton O Assumes ® stale Vs go meting en ternel yo he efonomy. Bu reolty 1% opposite ok it jod of spill over ebbect beyond He PY © bvdgek ® Assvwph’ on thal _oll_dexts axe boul | bene biciel a\l_public_expendiiburs 1522 — may gine vs_obsund yesult @ Ciiicize ossumplions a» patton best, noble enrenk To ascevtoin roo yeose wherhey public kinance ppevakion & Ve adding to net social advontege oy not gormuloke dA by rab ove certor yn generally acce prem Ohich the sociely nom ely 99007 PPP LPP Tesh is assuming Anenve desivable obseckives f Shel should 17 fo achieve kollewin yg: el © Preseniing Ave secichy — sstem oF el public Finance ensure odequal® | prefeckion te S0cichy _eqoinss bein g | jake ol o koveiqn 29 gxession L. dsr phson—cey Fein! ao dvontege yeltave ok the Communit] » —— 1 odd te secio) ° — @ & ononic w @ tn improvement in preduchion €4 @® Tmprovemen’ ‘wm dishibydion of NE e et Scanned with CamScanner> Hicks best Two criteria kor Judging wheather o porticulay public _kinance opevation or peli ty adds to nek seciol benekit ov no}. @ Production optimum v © vb oplimem ss achieved ib wveugh Production opkimum \s nob oduchive vesouyeeS syoduchion oF OY sea\iacation ob e aVocatven 2 thet incyease possible fo paithouk ved uci wen commodit same_ot dther- . nar hen a stage Ore aa wn PB GDP is veached whereby YOO Te euhth cen ask inecense PE SOPOT x Public Revenue [rasta eee Public Yevenue is achieved Revenue Reccipt Capikal veceipr Loon “Income sale oF roy assc} ov PSU sh b Income Conrency & : oie . ; on E> penditun ¢ Coinag t eared eats sini dends 1 fF inreves 2 probit L_ cox poration Intere} — Chorgss Fine — Scanned with CamScannerx Tar _buvyaney (Rese ettech) ‘ An wmevease in revenue o& 9 fot 30) é account oF a gyowth of 11S pase is termed : G5 buoyancy € By = 447 y 4 In} [400104 é at Leet? eee ¢ o @ : T — Tax € b Tar elosbicihy — CRate eheect) 7 Ratio ot preporlionate chonge in vevente oy a tar fo the prop nore ehergt é _o tan ye ne 1% eho in_ sts yale ev covvege mee SUVS € Jaw eloshiarty € . € - at ack Fy = fax i a f € ¢ cp - chenge in yore € k Lables cuvy ® € € Change in income € $ fox vate encvars ‘ i tue ceeeck 7 g @ avith netic ¢ beech € © «conev Heck € 2 ta wate. sting Rate ok incomt bar tax b art ny vevenut © e3 ig ebtech is chew : vary with oh € navthwet + “Chong 445 on ocrount ° Chonge in its unchow ged ter best: € Scanned with camScannérwwevevvuvvuvuvue - E Conomic ebbeck is YES a ulfont Change in bor Yevenue with change in tet bose itseb Ee es With successive ® intxease in fay vole ; bivsh Awe AS a he qahioe impack ob Income elect become equols ko & then ercé eals positive \mpack of ovithme Fic eblect- yevenue witsk increase peaks to esuik ex vevemue eer eS Limikation ob babkey wyve @ Based Oo” assumptyo pry oa tnar the economy] gui vespond fo ob income Tat ys closely @® pote _elosbiciky ok inces e exist enc _aimpoct & abkeck te by bh e meidences_ of other ten 19 rhe county y @ As iNteme Yat 4S imposed_on Hominel be oddiHonal packoy came @® vate ot inblotion ® pebates » tonce ss ion & exemprions repays Ww comey who picku re x Canon ok kores cone Ot BP? ose) daw ewith birt bovy canon | principle © Conon ol SAN pecovs poy more tor y Picner_shevld fet mn ob otake they could nor wide Ur protec to rove corned Lensoyed extra income - at observes obi cetive ok Economie jushi ce, Scanned with CamScannerTh prokects forpayey rom U4 hovvasement by box obbicials.. Toe Petey 4 Should wot be subject bo avbi hrowiness L discyehion ot *e4 obbiciols - The Hime mM orner ob poymen* & fhe a should be moiteessev7 | ob payment, quantity to be por +o contribute y eleoy ms mode & iming ot tar perme Shovid_be conve nienk “ko Mee NOR q ¢ ‘ ¢ é @ Conon ob Convenience € e é poyey. e 4 ® Canon ob economy © oe by bares should & Yio tost ok collection ob TOtte 2 minimum. TOS wolich ove a é ° yead Editticult to adminiskey € - \ 5P . be avoided: fl e © Conon ob voduckiviky bo genevale system should able 7 Ton sy5k S pee There + to dckicit oe Shou 4sinanciny @ enon ok buoy anced. Bliould hove jnhe veut 25 oes Tor ker yevenue ; pendency $e ineveose along wif yrevease tn nationel mcome. & Scanned with CamScanne!Se eowwrr- rr , PUuvcev eas eee w Peery ® Canon of Bevibiihy zy should bE possible bow government ; wihhouk ue delays bo revise he ter struckeyt both with ves peck to its covevane & vate. +o suik chenging need 0 Ok Economy ®© Gren of simplicity Tax system should “ot be boo mucky complikaked ty is wisky bor share 40 depend upon too yew sources ok tor YEvenue xz Expediency *hiory ob taxobion Every bog Po posel mush pass Ane teat ot prackicaloility Cov eeasibility). Eeenomic & should we Sociol objecti » the stake 4veated os *ht secondary, issues: Wegner advocated Social L potiticel objectives ab Socithy should be. decidirg He was in ye duedng Xack or in choos ina, Fores - kovoy of 4SINA taxation bOY income nequali Fes Scanned with CamScanneree Nelunk aw Cxthonge oer y Cwiekse!) \penebitk yeceive Witksell debended the Meovy on the ground prak tt allowed ‘en payer ke a pk out o® stake servile His basic ema tench wos tres Xer system ahold be beset on Nolunhovt a _phould SF -* athion, o& Me tea COTe™. vole of raxakion kien Id this *heov7 voles out nang a ngs ayslem xO Ot out wideseN odmit cquikable dis¥vibe preconditven ber bheory bo we © pplicable | caiMersm ve rHeee 7 | One anorre®¥ eypeckite® Anat poles out tyere veliable mechanis™ wheveloy con be borced te vevea) Fhe « servile . schedule Xow each sboks 36°05 — PP Pf. ig ne jot prey i demand po Assumeprions Assumy— GRR) e © Socithy Wor ont meee Ai consumers © THAT RK Ne 94 @® Jowrly “beov supply SVP cosh. € 5 »D = | [EVen?® a @ woth consumer veveo\ | 6 M4tanm a teely Fe ae “ aehiedul< E @ services subieck to lava ob diminishing veturn FQ service 1e OOO ¢ Scanned with CamScannerCGOCSCCSCE SCE eC CEC ES yom Om uv & SEUTEUEIIS Thus inkevodion oF demand L supply curve would simul taneously determine OO @ re aggregate volumt ob Skate sevvice © Theiy equilibyiv tision beh” ALB. © Allocotion ob cu pply sbetue en them. ie Hheiy toe burden Hey bor combn tos} shaved bekween ynem © demand oF service ic MP is my + meeriP mks cosh 6b supply) © Wy e@ stotés that With cose ob Fwo individuel in which each individual bases Wis demon schedule yoy stete seviice based on othey 1 demonad schedule is Biven. situation analogous be dekermine hon : oa ob price Under eliger’ clue pel & would ce_under O° gy oe depend upon cosibion assumed te BS _v pen fea exis} In the be inning (Ca explained ecesliey ® Unvealistie assume Hon oF Pre hax intome 35 optimal: alate sewvices Financed only tuveugh Aerahion tr creates nak rhe dishribubven oe Scanned with CamScanner* Cost of service Approach hot Wed to ony benebil o& Cikzens are beni i ve no hey brom skake kb ik they do vecetve anf wus} poy Cost ok jts Provision . ‘Tssues © p measuring lost ob state service aMocoting Annem bekween the benebi ciavtey © Exkeenolitre ignored ® state 's bing asgkcd to give vp iks loosic protective & welbeve function x Ability to poy limitations ' ich, OAbitity to poy depends upon MY money lich o ntibied 4 is dvicky meosure, Th con vio} led because of Skbiechivily @ same income bik dibberent need — ; © ers not alweys puvchosed loy vichev ony Cdeveloped counby vs un developer) | © Excesy wuyden Case- Lshibling . i Scanned with CamScanner6 oe 5446 SOCCER ECE CEE SS eS ee ee et ee se ee ee A Al A = oe: ww W SCC Expression oF common lel ieb that theve is always pew Vink ob box vecels piver been an Ggrecm on up Was Op this limik - Absolute bovoble capacity tekew Yo that morimum vo Lohich oo nok genevate neg eke Oo Aggvegat eve enploined variable day vevemue ov POY capit Enploinates tonsumpbiony ghxibubion ov pactors are yevel personal di @® Pepresentetive far system Relot estimated selected bax is byYor, Value ob the Yen ease fogether His ge us Joy vote: A Sociol value] Shoclow price Inelusive, OF both OF yoorketable exkerno li kies ression opp io Faken &3 a ken TevenUc’ ok’ uvbanizorio® we toxable capocit ¥ oe al oY one kot aba divided bY rere’ phy Hrovgh Fheye enk Gs 4o quenkem ob an Eeonewy lume of bax veceip h ative sum sored vo ach (arn Fe) either total ‘mcomet, per capita y wnrev = wacome, er © carn 6) state is Vie. Total -rield state pur \yov a\\ Live average ebbee jts marketable & nor Scanned with CamScanner> Tox Impact vs meidence Impack - bivst point of contact Tncidence, ~ Final vesting ploce. Ebbeet _ Response by 47 poyey 2 thus atkected economic unit whevthy inkluencg working of economy im several ways fovword A hetkword shibhin TW: Excise duby —3 produce’ producer Foret qnevease yeice nis Supple’ BW: Sacise dvby 3 wi pp yo accept lower pile SSSAEREESEE X Theories ob tox shitting PROD OD 4 Concentration Mreory There tg inhevont bendoury bor bores do be absorbed by certain jnéorne Closses. 9 eee Only Fhose person could beow dhe foxes Who ore aproprioting etonoraic surplus | Economic surplus could oceure in two tovms fvent L probitt « Actording\4 , all would get concenrvo rtd » / 11 ee woe Aan incidences site eevewist iy dnese fev0 berms, (Klessi¢el eovewist) ec a dithusion *heord >iveasion “neon biven ere ™te pendence ob 2 ronormic ssumin Alia 2G: Awe cromomy & aesaming 4 wege unil in 4 : . be hiaher then the Subsis teuce vate Cen ay bellows 4 Av Pou ren exis? oug how °° Anak econs Me surplus yevel 4 aye eromony © ® Scanned with CamScanner7 TTT YY EMOTO EEHOEOE ES: ‘ Hence o ter Cconomy could in ik }hyvough Numcvous oon se a tuys process Th Yhevebore become extvemel y dikkiculh to. kne binol location ob its incidence Agscevtain bully chibbused iy +e eComomic which geks system. a Demand supply theory Putevs shave gs selley Shore ta — Debicit binan cing as hidelen For toy —s tronskey ob ‘Yesources brom publ privel® to govern ment transber ob resources bub the with te net @ hidden borrowing ownership ‘remain private, hence iy ts tax Printing 4 high power monty —3 7 intlotioy money = . 4 pea) pricey -- privake sector Rrangber Some ob its resources overamenh pwonevsnip oy asseks. this joa hidden tat» ET aso increases ualities OS income a slabresl in bavor ob probit. _ in Favour oF without losin Scanned with CamScanner# Case Lov etpendituve bax ee Row eiPenditive tax © ebicencies of income tax = double Farallon Gr saved) © stevtelee stimulates economic groeth _°s tnwletes Sconoval ae Saving @ mvestmend 15 Nok suppyessca- 4 Deqvessive sox declining pro gvessivi ky with on increase in ils base - + Weubvolity oF bay Absence ob i¥s ebbect on bunebioning ob maykeb mechanism . x Levenz Cae Lterebion Levene Core Lrarebion \ ae ammulatiye peycenboge ob income Pegeess pregyegsind . ca mmulabin percentage db Population OOO ORARaAannnanaananaaa “ aaa - Scanned with CamScannerewweewwe ewes SVOEEUFEUUESEVEUUEVEEVVve vy lintlationoy ¥ Pressuye aphibika A Mon veguloled movket economy sivery yendtncy bor Cyclicel bluckuations Which Chen aig valume ok purches imag powey Ploys a centre) vole. @ebicik budgeting bor bi hima recession d suyplus budgeting sighting anslation a ae eo & Marshallion yeasoning b consumey surplus WOs a by aurhor brely a “axed Ty the less 0 ax colecke smolley syhew a enh out oF “shi ynves then rhe shitt oF YE : ae industry 15 vgngideved —berebicial —BSe TT sociehy © gneve vox & step s course allocation oprimem yesource alle i Hewee on iWs \asis Marshall concludes 5 aa operating ne ovrpur ob industry pe me ghovla be ee euler ahiminia hing YENES SO og seared y while ote ee caving unde qnereas 194 we eruns be supsidized: Limthal on © Ervect oF F yayation om producy sunpl> sqnoved @ Cost oF pevaviovy ab _‘ndusk y ios an mden oF tS Soca) worth. 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