Apuntes sobre Microeconomic Government Intervention in the Market en inglés para estudiantes de "Principios de economía" o para cualquiera buscando explicaciones claras y sencillas. Apuntes abarcan regulated prices, price ceilings, price floors, binding and not-binding, taxes on sellers and buyer...
REGULATED Prices
in competitive market no government regulation price of prod adjusts tobalance supply demand
suppherswantt
however itcanresultin toohighpricing Pia convict governmentset legalmaxprice
consumerswanted
price priceceiling
P
Pmax s government seteegaemin price
cs pricefloor
p
i
pmin ps
is
a a p
Priceceilings peeing S notbinding
if caungis above equilibriumprice notbinding noeffecton
Pora
solo
pi
i
it ceilingis below equilibriumprice binding Pouting
i binding
when pricereachesceiling market price priceceilings is
Qdemanded exceedsQsupplied shortage o Q
response toshortage rationingmechanisms notdesirable onlydesirable incompetitivemarkets
longwaitingeines some wait some don't waste customertime
effects severs personal bias discrimination
dprice lottery auequalchance
d quantity
d producersurplus
t totalsurplus
T d Cs depending on who
yousell to
Pricefloors
naturalmovetoequilibriumnoeffectofpricefloor
if equilibriumprice is abovethe floor notbinding
it equilibriumprice is below the floor binding
wheneg makespricereachfloorcantgofurther ooomarketprice pricefloor surplus
response tosurplus rationingmechanisms undiserable
infreemarket price serves us rationingmechanism sellers cansell all they want
p at equilibriumprice
Pfloor S binding
p
Pfleor ii not binding
i is
a a
evaluating pricecontrols
markets aregood at organizingeconomy oppose priceceilings6 pricefloors balancingeconomy
governments improve marketoutcomes helping the poor
, Taxes
to raise revenue forpublic projects
taxincidence manner inwhich the burdenof a tax is shared among participants in a market
i whobearsburdenof tax Buyers sellers
types of taxes
perunit or specific tax tax for each unit bought
ad valoremtax add a fixedrate on sellers
sale tax depends on who sends money to governent
on buyers
Taxes on sellers Effect on market outcomes
e Decide if law affects supplycurve or demand curve
2 Decidedirectionofshifting
3 Effect of shift on equilibrium
ex tax on icecreamsellers 0.50ofeachicecream
Effect on buyers sellers
p se
s
wilibrium
w taxi io
t y astaxnot on buyers quantity of icecream demanded is thesame demandcurve
p Eawa
price icecreamlessprofitable forsewers shift supplycurve
i
a I I iI b D rcostet production sewing d quantity supplied shiftto Lett
i i
i marketprice must be 0.50higherto make up
a a Q g i p I Q reduction of size of market
sellerspay tax to goverment B as 8marketprice
Buyers sellers shareburden
f s ireceivedreturnsaftertax
taxesdiscouragemarketactivity
Taxes on Buyers Effect on market outcomes
ex tax of 0.50 foreach cone customer bugs
p ax s y shifton demand curve
guili I o no effect or supply as theirincentive doesn'tchange
witaxp Eawe
pi i i price y buyers todemand
µi marketprice must be 0.50lower to make up
i D
i 3 dp't dQ't reducessize of market
a a Q B Teffectiveprice
O Buyers
f
sellers shareburden s id price for products
wedge b w buyers sellers is
the same regardless whohasthe taxlevied
Elasticity Tax incidence
wage
juggle
Labors
Pasro tax placeswedge bw wageworkers
waget.ms
pay cs receiveEwagefirms
pay
wagenotax IFagelou
workers
wage
pay ps laborD
Qof
labor
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