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eco ch 6

  1. price ceiling
    legal max on a price of a good or svc

    if above gthe eqm not binding if below it is binding
  2. -Price floor
    • - legal min on price of goods and services (min wage)
    • - if below the eqm price not binding if above it is binding
  3. a binding price ceiling causes a
    shortage
  4. a binding price floor causes a
    surplus
  5. tax incedence
    how the burden of a tax is shared among market particpants
  6. a tax on sellers
    shifts the s curve up by the amount of the tax
  7. a tax on buyers
    shifts the demand curve down by the amount of the tax
  8. the effects on p&q and tax incidence are
    the same whether the tax is imposed on buyers or sellers

    a tax drives a wedge b/t the price buyers pay and price sellers receive
  9. if supply is more elastic than demand
    • buyers bear most of the tax burden
    • its easier for sellers than buyers to leave the market
  10. if demand is more elastic than supply
    its easier for buyers than sellers to leave the market

    sellers bear most of the burden
  11. who pays the luxury tax
    the companies that manufacture the luxuries
Author
jillmray
ID
67948
Card Set
eco ch 6
Description
tax incedence
Updated

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