Chapter6+JDEM





==== //This chapter is about the government's reaction towards the consumers and the producers. By making regulations such as, "Price ceilings" and "Price floors" the government tries to support the consumers and producers. However, as according to the Adam Smith's invisible hand the market is supposed to flow the best when it is untouched by the government so there are also negative outcomes that come from these regulations.// ====

__**Key Concepts:**__

// What is a Price Ceiling? //



====When a Price ceiling is binding, consumers are benefiting as the price of the products will be limited to certain point and it will be cheaper. For suppliers, they will lose some money as they can't raise the money to certain points. As an example of a price ceiling is rent prices. For short term, consumers will benefit quite a lot since the prices offered by the rents will go down. However, viewing the long term effects, it is worse off for both consumers and producers. People supplying the rent will slowly decrease, and this will give renters chance to choose who to lend the rent to. Additionally, as suppliers are making less money, and as there are more people wanting the rent so there will be same amount of people wanting the rent without any development, the incentive of developing the rent is taken away. Therefore as a long term, the region with price ceiling to rent, will not develop.====

// What is a Price Floor? //

====When a Price floor is binding workers working at minimum wage benefits. However, in long term problems may rise. As there are minimum amount of money promised to the workers, the workers with job and without jobs are in bigger problem. Companies, not being able to supply such money, numbers of workers they use will go down. Therefore, people with jobs will easily be replaced, as well as people without jobs will not get jobs as there are less place available. Long term wise, minimum wage will hurt both suppliers and consumers.====

// H ow does taxes on sellers affect market outcomes? //



// How does taxes on buyers affect market outcomes? //

==When tax is adjusted to any side, not mattering buyer or the seller, they both share the burden of the tax. None of them benefits, leading a creation of Dead Weight Loss!! (Further more in chapter 8, Dead Weight Loss will be covered more deeply)==
 * It is not even necessary to explain the steps of the outcomes that will occur from tax.**



=**Video reviewing Price ceiling and Price floors**= media type="youtube" key="eDHBKfad8WQ" height="344" width="425"

=**Conclusion**= ==== //Over this chapter, Government policies of price ceilings and price floor was learned. Although to certain degree, government policies will finish things faster and there will be faster and rapid change in the economy that might help the economy in a good way. However, it must be remembered that it is best when there is no government intervention. Also according to Adam Smith, the market will work in its best shape when it is not intervened and when it is only formed by individual's seeking for benefits.// ====

d. established by firms with monopoly power.
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__**Vocab List**__
Price Ceiling: A legal maximum on the price at which a good can be sold Price Floor: A legal minimum on the price at which a good can be sold. (Those two regulations are what this chapter is mostly about) Taxes: Money collected by the government to raise revenue for public projects. However, by having tax, dead weight loss is created. Tax incidence: How the tax is divided between both the consumers and the producers.

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