Chap06Supply,DemandandGovernmentPolicies(曼昆)(.ppt

,Supply,DemandandGovernmentPolicies,Chapter6,Copyright2001byHarcourt,Inc.Allrightsreserved.Requestsforpermissiontomakecopiesofanypartoftheworkshouldbemailedto:PermissionsDepartment,HarcourtCollegePublishers,6277SeaHarborDrive,Orlando,Florida32887-6777.,Supply,Demand,andGovernmentPolicies,Inafree,unregulatedmarketsystem,marketforcesestablishequilibriumpricesandexchangequantities.Whileequilibriumconditionsmaybeefficient,itmaybetruethatnoteveryoneissatisfied.Oneoftherolesofeconomistsistousetheirtheoriestoassistinthedevelopmentofpolicies.,PriceControls.,Areusuallyenactedwhenpolicymakersbelievethemarketpriceisunfairtobuyersorsellers.Resultingovernment-createdpriceceilingsandfloors.,PriceCeilings&PriceFloors,PriceCeilingAlegallyestablishedmaximumpriceatwhichagoodcanbesold.PriceFloorAlegallyestablishedminimumpriceatwhichagoodcanbesold.,PriceCeilings,Twooutcomesarepossiblewhenthegovernmentimposesapriceceiling:Thepriceceilingisnotbindingifsetabovetheequilibriumprice.Thepriceceilingisbindingifsetbelowtheequilibriumprice,leadingtoashortage.,APriceCeilingThatIsNotBinding.,$4,3,QuantityofIce-CreamCones,0,PriceofIce-CreamCone,Demand,Supply,100,Equilibriumquantity,Harcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.,APriceCeilingThatIsBinding.,$3,QuantityofIce-CreamCones,0,PriceofIce-CreamCone,2,Demand,Supply,Harcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.,EffectsofPriceCeilings,Abindingpriceceilingcreates.shortagesbecauseQDQS.Example:Gasolineshortageofthe1970snonpricerationingExamples:Longlines,Discriminationbysellers,LinesattheGasPump,In1973OPECraisedthepriceofcrudeoilinworldmarkets.Becausecrudeoilisthemajorinputusedtomakegasoline,thehigheroilpricesreducedthesupplyofgasoline.,Whatwasresponsibleforthelonggaslines?,Economistsblamegovernmentregulationsthatlimitedthepriceoilcompaniescouldchargeforgasoline.,ThePriceCeilingonGasolineIsNotBinding.,$4,P1,QuantityofGasoline,0,PriceofGasoline,Q1,Demand,Supply,ThePriceCeilingonGasolineIsBinding.,P1,QuantityofGasoline,0,PriceofGasoline,Q1,Demand,S1,Priceceiling,RentControl,Rentcontrolsareceilingsplacedontherentsthatlandlordsmaychargetheirtenants.Thegoalofrentcontrolpolicyistohelpthepoorbymakinghousingmoreaffordable.Oneeconomistcalledrentcontrol“thebestwaytodestroyacity,otherthanbombing.”,RentControlintheShortRun.,QuantityofApartments,0,RentalPriceofApartment,Demand,Supply,Supplyanddemandforapartmentsarerelativelyinelastic,RentControlintheLongRun.,QuantityofApartments,0,RentalPriceofApartment,Demand,Supply,Becausethesupplyanddemandforapartmentsaremoreelastic.,rentcontrolcausesalargeshortage,PriceFloors,Whenthegovernmentimposesapricefloor,twooutcomesarepossible.Thepricefloorisnotbindingifsetbelowtheequilibriumprice.Thepricefloorisbindingifsetabovetheequilibriumprice,leadingtoasurplus.,APriceFloorThatIsNotBinding.,$3,QuantityofIce-CreamCones,0,PriceofIce-CreamCone,100,Equilibriumquantity,Demand,Supply,2,APriceFloorThatIsBinding.,$3,QuantityofIce-CreamCones,0,PriceofIce-CreamCone,Demand,Supply,$4,Harcourt,Inc.itemsandderiveditemscopyright2001byHarcourt,Inc.,EffectsofaPriceFloor,Apricefloorpreventssupplyanddemandfrommovingtowardtheequilibriumpriceandquantity.Whenthemarketpricehitsthefloor,itcanfallnofurther,andthemarketpriceequalsthefloorprice.,EffectsofaPriceFloor,Abindingpricefloorcauses.asurplusbecauseQSQD.nonpricerationingisanalternativemechanismforrationingthegood,usingdiscriminationcriteria.Examples:Theminimumwage,Agriculturalpricesupports,TheMinimumWage,Animportantexampleofapriceflooristheminimumwage.Minimumwagelawsdictatethelowestpricepossibleforlaborthatanyemployermaypay.,TheMinimumWage,QuantityofLabor,0,Wage,Labordemand,Laborsupply,AFreeLaborMarket,TheMinimumWage,QuantityofLabor,0,Wage,Labordemand,Laborsupply,ALaborMarketwithaMinimumWage,Taxes,Governmentslevytaxestoraiserevenueforpublicprojects.,Whataresomepotentialimpactsoftaxes?,Taxesdiscouragemarketactivity.Whenagoodistaxed,thequantitysoldissmaller.Buyersandsellerssharethetaxburden.,Taxes,Taxincidenceisthestudyofwhobearstheburdenofatax.Taxesresultinachangeinmarketequilibrium.Buyerspaymoreandsellersreceiveless,regardlessofwhomthetaxisleviedon.,Impactofa50TaxLeviedonBuyers.,3.00,QuantityofIce-CreamCones,0,PriceofIce-CreamCone,100,D1,Supply,S1,Copyright2001byHarcourt,Inc.Allrightsreserved,3.00,QuantityofIce-CreamCones,0,PriceofIce-CreamCone,100,90,D1,D2,Supply,S1,Impactofa50TaxLeviedonBuyers.,Copyright2001byHarcourt,Inc.Allrightsreserved,Whatwastheimpactoftax?,Taxesdiscouragemarketactivity.Whenagoodistaxed,thequantitysoldissmaller.Buyersandsellerssharethetaxburden.,3.00,0,100,S1,Demand,D1,Impactofa50TaxonSellers.,Copyright2001byHarcourt,Inc.Allrightsreserved,APayrollTax,QuantityofLabor,0,Wage,Labordemand,Laborsupply,TheIncidenceofTax,Inwhatproportionsistheburdenofthetaxdivided?Howdotheeffectsoftaxesonsellerscomparetothoseleviedonbuyers?,Theanswerstothesequestionsdependontheelasticityofdemandandtheelasticityofsupply.,ElasticSupply,InelasticDemand.,Quantity,0,Price,Demand,Supply,InelasticSupply,ElasticDemand.,Quantity,0,Price,Demand,Supply,So,howistheburdenofthetaxdivided?,Theburdenofataxfallsmoreheavilyonthesideofthemarketthatislesselastic.,Summary,Pricecontrolsincludepriceceilingsandpricefloors.Apriceceilingisalegalmaximumonthepriceofagoodorservice.Anexampleisrentcontrol.Apricefloorisalegalminimumonthepriceofagoodoraservice.Anexampleistheminimumwage.,Summary,Taxesareusedtoraiserevenueforpublicpurposes.Whenthegovernmentleviesataxonagood,theequilibriumquantityofthegoodfalls.Ataxonagoodplacesawedgebetweenthepricepaidbybuyersandthepricereceivedbysellers.,Summary,Theincidenceofataxreferstowhobearstheburdenofatax.Theincidenceofataxdoesnotdependonwhetherthetaxisleviedonbuyersorsellers.Theincidenceofthetaxdependsonthepriceelasticitiesofsupplyanddemand.,APriceCeilingThatIsNotBi