A government decides to Impose an indirect tax on fast food. Discuss the effects for the stakeholders in these markets.

First, we must begin by defining an indirect tax. An indirect tax is a tax that is levied on a particular good, making it a tax that taxes consumers based on their consumption choices. Issuing an indirect tax on a particular good (whether it be ad valorem or a fixed tax) decreases both consumer and producer surplus. This is as consumers must now pay a price higher than equilibrium price and producers receive a price that is lower than the equilibrium price. This is shown by a leftwards shift in the supply curve, as the price that fast food is sold at by producers Fast Food has increased by an $x amount at every quantity. This causes a contraction of demand for fast food as the price consumers must pay has increased. It is important to not that the price that consumers pay is not the equilibrium price plus tax $x. The difference between the price consumers pay and price producers receive is $x. The reason why this is is due to forces of supply and demand reaching a new equilibrium which will be lower than the previous equilibrium +$x.With the explanation above, we can expect producers and consumers to be negatively affected by an indirect tax on fast food. The area of consumer surplus and producer surplus have both decreased. However, there is another stakeholder that we must consider. As there is government intervention in the market, we must now consider the government as a stakeholder. The government experiences a positive effect. This is as if one were to times the tax amount $x by the quantity consumed in the new equilibrium, one calculates the government revenue received. To conclude, both consumers and producers experience a negative effect and the government experiences a positive effect.