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[10 marks] Define tax: indirect tax is a tax levied on goods and services, it is levied on producers who then pass on to consumers in terms of higher prices Define PED: PED refers to the degree of responsiveness of quantity demanded to a given change in price of the product Ability of market forces of demand and supply to achieve allocative inefficiency, ie welfare not maximised (DWL exists) and there is requirement of government intervention

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