ECON-UA 2 Lecture Notes - Lecture 3: Tax Wedge, Evernote, Demand Curve
7 Sep 2016
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2 ways government can intervene to change free market equilibrium outcome: Fight the market | presents the market from reaching the equilibrium price by using. Price ceiling | below equilibrium price, government imposed by controlling the maximum of price. Price floor | government imposed price that is higher than the free market p* by limiting imports for food Distort people"s buying & eating habits & nutritional intakes. Manipulate markets | attempts to change the equilibrium outcome by using. Taxes | goal: raise revenue to provide public goods/services & correct inequalities. Excise tax | specific tax on a specific good/service. Statutory burden | burden on the party that is responsible for sending the check to the government (can pass some or all of the burden to others) Tax incidence/economic burden | burden in terms of reduced resources as a result of a tax on either the buyer or the seller (measured by change in price)
