CAS EC 101 Lecture Notes - Lecture 4: Price Ceiling, Economic Equilibrium, Demand Curve

• School: Boston University
• Department: Economics
• Course: CAS EC 101
• Professor: Saponara

Document Summary

Having learned the technical details behind supply from producers, demand from consumers, and the elasticity of those groups, we now want to consider various government policies and analyze their impact on supply and demand in a given market. As we will see, the extent to which a policy accomplishes its nominal goal and/or produces complicating side e ects will depend greatly on the elasticities of supply and demand: price floors: minimum wage and unemployment. The rst policies we want to investigate are government price controls. Policymakers can introduce price controls like these whenever they feel the market price for a good or service is unfairly high or low, for whatever reason. Consider the most famous real-world example of a price oor: the minimum wage. We discussed the market for labor some when proposing possible violations of the law of supply.