ECON 1100 Lecture Notes - Lecture 7: Price Floor, Price Ceiling, Shortage
30 Sep 2015
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6pm -8pm erie hall 1120, fri oct 9 be there 5:45. Tr from perspective of producers, expenditures with consumers. Qd at consumer price is equal to the qd at the seller price. Distance between p1 and p2 is overall tax burden. Tax burden size depends on steepness of the curves; the elasticity of demand and supply. The distance between p0 and p1 is larger than distance of p0 and p2, therefore the tax burden is heavier on the consumer. Equilibrium analysis> partial equilibrium> analysis of a single market taken in isolation. Equilibrium analysis> general equilibrium> analysis of all the markets simultaneously. In disequilibrium > qs does not equal qd: price floors. Price floor is the minimum permissible price that can be charged for a good or service. E1= number of workers that work at minimum. A price ceiling leads to excess demand. Pc is the maximum price in which certain goods and services may be exchanged.
