Econ Chapter 6

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Author:
misol
ID:
269610
Filename:
Econ Chapter 6
Updated:
2014-04-07 14:45:10
Tags:
Economy Shah chapter
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Description:
Econ chapter 6
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  1. Government imposes Price controls
    • When policy makers believe the price of a good or service is unfair to the buyer or seller
  2. Price Ceiling
    • legal max on market price at which a product must be sold in the market
    • protects consumers/buyers and always results in a shortage

    ie rent control policy

     falls below equilibrium
  3. Price Floor
    • legal minimum on the market price at which a product must be sold in the market
    • protects sellers and always results in a surplus/unemployment

    ie min wage policy

    fals above equilibrium price
  4. Binding price ceiling and price floor
    when what it takes to get to equilibrium is illegal
  5. Size of tax
    price that buyers pay after tax - price that sellers receive after the tax
  6. With Payroll Taxes
    • Wages received by works falls/decreases
    • Wages paid by firm rises/increases

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