Economics 1021A/B Study Guide - Midterm Guide: Marginal Utility, Price Ceiling, Tax Incidence

• School: Western University
• Department: Economics
• Course: Economics 1021A/B
• Professor: Irene Trela

Document Summary

Chapter 6 : gover(cid:374)(cid:373)e(cid:374)t a(cid:272)tio(cid:374) i(cid:374) markets: price ceiling: regulation that makes it illegal to charge above a specified price (syn: price cap, when applied to housing market, it is a rent ceiling. If set above equilibrium price/rent, it has no effect. If set below equilibrium price/wage, it has no effect. If binding, inefficient underproduction msb > msc: subsidy: a pa(cid:455)(cid:373)e(cid:374)t (cid:373)ade (cid:271)(cid:455) the go(cid:448)"t to a produ(cid:272)er, graphically, s shifts downward (s s subsidy) Chapter (cid:1012) & (cid:1013) : utility a(cid:374)d de(cid:373)a(cid:374)d & possi(cid:271)ilities, If it is relative steep, mrs is high willing to give up a large portion. Income effect is the effect of a change in income on the quantity consumed budget line shift. Implicit rental rate of capital is the fir(cid:373)"s opp. (cid:272)ost of usi(cid:374)g o(cid:449)(cid:374)ed (cid:272)apital, (cid:373)ade up of economic depreciation and interest forgone: economic depreciation is the change in market value of capital.