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ECN 104 (447)

Chapter 6_Slides.ppt

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ECN 104
Tsogbadral Galaabaatar

Chapter 6Supply Demand andGovernment Policies 1 Copyright2011 Nelson Education Limited In this chapterlook for the answers to these questions What are price ceilings and price floors What are some examples of each How do price ceilings and price floors affect market outcomes How do taxes affect market outcomesHow do the effects depend on whetherthe tax is imposed on buyers or sellersWhat is the incidence of a tax What determines the incidence2 Copyright2011 Nelson Education Limited Government Policies That Alter thePrivate Market OutcomePrice controls Price ceilinga legal maximum on the priceof a good or service Example rent controlPrice floora legal minimum on the price ofa good or service Example minimum wage Taxes The govt can make buyers or sellers pay a specific amount on each unit boughtsold We will use the supplydemand model to seehow each policy affects the market outcomethe price buyers pay the price sellers receive and eqm quantity 3 Copyright2011 Nelson Education Limited
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