ECO101H1 Lecture Notes - Economic Surplus, Economic Equilibrium, Indirect Tax

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8 Apr 2012
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Lecture Assignment #4- Interventions 20111003
Maximum Price (Price Ceiling)
Minimum Price ( Price Floor)
Quota (Restrict Quantity)
Deficiency Payment (Per Unit Subsidy)
Excise Tax (Per Unit Tax)
#1 Maximum Price (Price Ceiling)
- Equilibrium cannot be reached
- Effective at keeping the price
- Create excess demand
- Consumer not satisfied
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Leads to..
- Black Market
#2 Minimum Price ( Price Floor)
- Buy excess supply or the scenario is not effective or sustainable
- Buy to give to foreign aid or EXPORT !
What if it is Service?
Labour Service?
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L3-L2= Unemployment
- People used to have jobs, don’t have no more or work less hour since the minimum wage is
implied
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