Textbook Notes (368,843)
Canada (162,200)
Economics (923)
ECN 104 (387)
Eric Kam (21)
Chapter 6

Chapter 6 and 7

5 Pages
134 Views
Unlock Document

Department
Economics
Course
ECN 104
Professor
Eric Kam
Semester
Winter

Description
Chapter 6 Price controls • Price ceiling: a legal maximum on the price of a good service o If price ceiling is above the equilibrium price, equilibrium is still acceptable. (not binding) o If the price ceiling is underneath the equilibrium, the price ceiling becomes the actual price (binding constraint). The shortage will be equal to the d s difference between the Q and the Q *in the long run, supply and demand become more price elastic bigger shortage as a result • Price floor: a legal minimum on the price of a good or service o If the price floor is below the equilibrium, the equilibrium is still acceptable (not binding) o If the price floor is above the equilibrium, the price floor because the actual price (binding constraint). The surplus, wasted resources, will be equal to the difference between the Q and the Q s o • Taxes: The government can’t make you pay a specific amount o Tax on buyers shift the demand curve to the left by the amount, while tax on sellers shifts the supply curve to the left by the amount. the price on buyers rise the price on sellers fall o Based on the equilibrium, the tax represents the gap between P andbP s Tax burden falls more heavily on the side of the market that is less elastic Based on the Quantity: the more elastic, the less you pay (vice versa) www.notesolution.com www.notesolution.com Chapter 7 Welfare economics: the study of how the allocation of resources affects economic well-being SURPLUS ON THE DEMAND CURVE • Willingness to pay: the maximum amount the buyer will pay for that good; how much
More Less

Related notes for ECN 104

Log In


OR

Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


OR

By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.


Submit