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ch06.ppt
- 1. Copyright ยฉ 2006 Thomson Learning 6 Supply, Demand, and Government Policies
- 2. Figure 1 A Market with a Price Ceiling (a) A Price Ceiling That Is Not Binding Quantity of Ice-Cream Cones 0 Price of Ice-Cream Cone Equilibrium quantity โฌ4 Price ceiling Equilibrium price Demand Supply 3 100
- 3. Figure 1 A Market with a Price Ceiling Copyrightยฉ2003 Southwestern/Thomson Learning (b) A Price Ceiling That Is Binding Quantity of Ice-Cream Cones 0 Price of Ice-Cream Cone Demand Supply 2 Price ceiling Shortage 75 Quantity supplied 125 Quantity demanded Equilibrium price โฌ3
- 4. Figure 2 Rent Control in the Short Run and in the Long Run Copyrightยฉ2003 Southwestern/Thomson Learning (a) Rent Control in the Short Run (supply and demand are inelastic) Quantity of Apartments 0 Supply Controlled rent Rental Price of Apartment Demand Shortage
- 5. Figure 2 Rent Control in the Short Run and in the Long Run Copyrightยฉ2003 Southwestern/Thomson Learning (b) Rent Control in the Long Run (supply and demand are elastic) 0 Rental Price of Apartment Quantity of Apartments Demand Supply Controlled rent Shortage
- 6. Figure 3 A Market with a Price Floor Copyrightยฉ2003 Southwestern/Thomson Learning (a) A Price Floor That Is Not Binding Quantity of Ice-Cream Cones 0 Price of Ice-Cream Cone Equilibrium quantity 2 Price floor Equilibrium price Demand Supply โฌ3 100
- 7. Figure 3 A Market with a Price Floor Copyrightยฉ2003 Southwestern/Thomson Learning (b) A Price Floor That Is Binding Quantity of Ice-Cream Cones 0 Price of Ice-Cream Cone Demand Supply โฌ4 Price floor 80 Quantity demanded 120 Quantity supplied Equilibrium price Surplus 3
- 8. Figure 4 How the Minimum Wage Affects the Labour Market Copyrightยฉ2003 Southwestern/Thomson Learning Quantity of labour Wage 0 labour demand labour Supply Equilibrium employment Equilibrium wage
- 9. Figure 4 How the Minimum Wage Affects the Labour Market Copyrightยฉ2003 Southwestern/Thomson Learning Quantity of labour Wage 0 labour Supply labour surplus (unemployment) labour demand Minimum wage Quantity demanded Quantity supplied
- 10. Figure 5 A Tax on Buyers Copyrightยฉ2003 Southwestern/Thomson Learning Quantity of Ice-Cream Cones 0 Price of Ice-Cream Cone Price without tax Price sellers receive Equilibrium without tax Tax (โฌ0.50) Price buyers pay D1 D2 Supply, S1 A tax on buyers shifts the demand curve downward by the amount of the tax (โฌ0.50). โฌ3.30 90 Equilibrium with tax 2.80 3.00 100
- 11. Figure 6 A Tax on Sellers Copyrightยฉ2003 Southwestern/Thomson Learning 2.80 Quantity of Ice-Cream Cones 0 Price of Ice-Cream Cone Price without tax Price sellers receive Equilibrium with tax Equilibrium without tax Tax (โฌ0.50) Price buyers pay S1 S2 Demand, D1 A tax on sellers shifts the supply curve upward by the amount of the tax (โฌ0.50). 3.00 100 โฌ3.30 90
- 12. Figure 7 A Payroll Tax Copyrightยฉ2003 Southwestern/Thomson Learning Quantity of labour 0 Wage labour demand labour supply Tax wedge Wage workers receive Wage firms pay Wage without tax
- 13. Figure 8 How the Burden of a Tax Is Divided Copyrightยฉ2003 Southwestern/Thomson Learning Quantity 0 Price Demand Supply Tax Price sellers receive Price buyers pay (a) Elastic Supply, Inelastic Demand 2. . . . the incidence of the tax falls more heavily on consumers . . . 1. When supply is more elastic than demand . . . Price without tax 3. . . . than on producers.
- 14. Figure 8 How the Burden of a Tax Is Divided Copyrightยฉ2003 Southwestern/Thomson Learning Quantity 0 Price Demand Supply Tax Price sellers receive Price buyers pay (b) Inelastic Supply, Elastic Demand 3. . . . than on consumers. 1. When demand is more elastic than supply . . . Price without tax 2. . . . the incidence of the tax falls more heavily on producers . . .