ECON 208 Lecture Notes - Lecture 3: Deadweight Loss, Economic Surplus, Price Ceiling

• School: McGill University
• Department: Economics (Arts)
• Course: ECON 208
• Professor: Irakli Japaridze

Document Summary

Chapter 5: markets in actions (cid:120) what happens in one market effects another (cid:120) conflict between today"s benefit versus tomorrows harm (cid:120) society is everybody, not just a single group. Interaction among markets (cid:120) what happens in one market can cause a spillover into another market e c i r. P controlled price non-binding: can either be binding or (cid:131) a price floor is non-binding when it is below the equilibrium price (cid:120) 0 (cid:131) binding price floors help suppliers by artificially increasing prices thus causing an excess supply gap in which there are more sellers but fewer buyers: black market: any market in which goods are skid at illegal prices. In the short run, the tenants benefit from rent control. In the long run, rent control will lead to a housing shortage as the rent controlled buildings will deteriorate and no one will repair them/build more therefore tenants suffer (cid:120) landlords always lose.