Chapter+6+JK+&+JJ

=6 Supply, Demand, and Government Policies = A legal maximum on the price at which a good can be sold. A legal minimum on the price at which a good can be sold. The manner in which the burden of tax is shared among participants in a market media type="youtube" key="4MMIkkG8pAQ" height="344" width="425"
 * Key Concepts**
 * Price Ceiling**
 * Price Floor**
 * Tax Incidence**

Often times in real life situations there are price ceilings and price floors, which are used to prevent products to reach a cheaper price or higher price. when the price ceiling would be the dotted lines it does not create any binding(which leaves everything the same), however when the price ceiling is the regular green line it is binding and it creates a shortage in which customers cannot receive the product.

OFTEN TIMES Price ceiling is used to help the poor. Especially incases like low wages. When you increase the price for the wage, it creates a shortage and people face unemployment. So economists believe price ceiling is the best way to destroy a city without bombinb it.

So let's use the same graph to analyze Price floors. If the Price floor was the dotted line, then there would be a surplus, and excess in supply, on the other hand if it was the regular green line, there would be no binding which means there would be no effect on the product.

Tax incidence the manner in which the burden of a tax is shared among participants in a market. Elastic supply and Inelastic Demand -more burden to the buyer, buyer has to pay more

Inelastic supply and Elastic Demand -more burden to the supplier, more tax they pay

when supply and demand are both same whether elastic, unit 1, or inelastic they they all share the SAME burden

Tax wedge

Luxury tax most economist believe that it is fair to tax the richer people, there for tax on luxury tax are higher. sometimes the sellers gets taxed more in a inelastic supply and elastic demand, however most of the times the buyer pays more(elastic supply and inelastic demand)

rent control in short run and long run plz(not finished topic but 33% stil complete)

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