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10 Cards in this Set
- Front
- Back
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Price Ceilling
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A legal Maximum on the price of which a good can be sold
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Price floor
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A legal minimum on the price at which a god can be sold
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Non binding ceiling
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natural price is below the ceiling
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binding constraint ceiling
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natural price is above the ceiling
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When a binding ceiling constraint is imposed then
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a shortage of the good arises
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When a binding price floor is created then
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we end up with a product surplus
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Tax incidence
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the manner in which teh burden of tax is shared by buyers and sellers
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tax leived on the sellers of a good. what are the three steps
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1. demand curve stays same, supply curve shifts up
2. Supply curve shifts up by tax amount 3. equilibruim price increases, equilibrium quantity reduces |
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Tax lieved on the buyers of a good. what are the three steps
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1. Supply curve doesn not move, Demand curve moved down
2. demand curve moves down/left 3. Price falls and demand curve shifts downward exact amount of tax |
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Which side of the market will assume more of the tax burdon
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the side that is less elastic
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