Effect of Price Ceiling(Floor)
Intro:
- Define what is a price ceiling
- Price ceiling is a form of government intervention which is a price control implemented in
order to increase equity
- Example of Price ceiling is rent controls in London; prevent the charging of above a certain
price for rent in order to try and increase affordability of housing
- Example of Price floor is minimum wage; currently is £6.45/hr for 18-20 yr olds and £8.20/hr
for 21-24 yr olds (National Minimum Wage and National Living Wage Rates, 2020)
- Price controls are important for governments to consider using in order to improve equity in
society i.e. attempt to make society fairer.
Main Body:
- Price Ceiling D+S Diagram
- Excess Demand
- Lower Price
- Market doesn’t clear due to the effect of the legal price control
- People may still consume a good or service using black market.
- People may simply import the good/service
Conclusion:
- Summarise the effect of the price ceiling
Effect of Indirect Tax
Intro:
- Define Indirect taxes
- Define the type of tax in question: Ad-valorem/specific tax
Main Body:
- Diagram for the tax
- Price and Quantity changes
- Reason behind shift of curve left and shape of the curve shift
- Incidence of tax
- Variation of Incidence depending on elasticity of supply/demand: resulting difference in
burden of tax: does this affect the purpose for why the tax was used?
Conclusion:
- How effective is the tax at achieving what it aimed to?
Intro:
- Define what is a price ceiling
- Price ceiling is a form of government intervention which is a price control implemented in
order to increase equity
- Example of Price ceiling is rent controls in London; prevent the charging of above a certain
price for rent in order to try and increase affordability of housing
- Example of Price floor is minimum wage; currently is £6.45/hr for 18-20 yr olds and £8.20/hr
for 21-24 yr olds (National Minimum Wage and National Living Wage Rates, 2020)
- Price controls are important for governments to consider using in order to improve equity in
society i.e. attempt to make society fairer.
Main Body:
- Price Ceiling D+S Diagram
- Excess Demand
- Lower Price
- Market doesn’t clear due to the effect of the legal price control
- People may still consume a good or service using black market.
- People may simply import the good/service
Conclusion:
- Summarise the effect of the price ceiling
Effect of Indirect Tax
Intro:
- Define Indirect taxes
- Define the type of tax in question: Ad-valorem/specific tax
Main Body:
- Diagram for the tax
- Price and Quantity changes
- Reason behind shift of curve left and shape of the curve shift
- Incidence of tax
- Variation of Incidence depending on elasticity of supply/demand: resulting difference in
burden of tax: does this affect the purpose for why the tax was used?
Conclusion:
- How effective is the tax at achieving what it aimed to?
