Sunday, September 9, 2007

Session 6

Price ceiling

  • A legal maximum on the price at which a good can be sold
  • Example : Rent Control

Price floor

  • A legal minimum on the price at which a good can be sold
  • Example : Minimum wage

Tax incidence

  • the manner in which the burden of tax is shared among participants in a market

If supply is more price-elastic than demand, greater burden is borne by buyers

If demand is more price-elastic than supply, greater burden is borne by sellers

1 comment:

Unknown said...

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