Government intervention, positive externality

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Department
Agriculture + Resrce Econ
Course
AREC 202
Professor
Christopher Goemans
Semester
Fall

Description
28 September Tax in an otherwise perfectly functioning market D gross: P = 10 – Q If per unit sales tax = $1, D net: P = 9 - Q S: P = Q 9 – Q = Q 9 = 2Q Q = 4.5 Test ? What if S: P = 2 + Q D: P = 10 – Q Government mechanics for market control Price ceilings Price floors Quotas (minimum or maximum) Taxes (sales [unit or ad valorem] or excise [unit or ad valorem]) Government intervention Long – run issues Equity, fairness (competition, opportunity) Markets aren’t always efficient They need perfect information Without perfect
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