Class Notes - 9-21-07

Class Notes - 9-21-07 - Macroeconomics Class Notes 9/21/07...

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Macroeconomics – Class Notes – 9/21/07 JUST DO CHAPTER 6 BOOK PROBLEMS – NO WORKSHEET – KEEP CHAPTER 10 WORKSHEET FOR LATER! OUTLINE Price Ceilings (Ch. 6) Price Floors Applications - A Price Ceiling o A maximum legal price - A Price Floor o A minimum legal price MARKET IMPACTS OF A PRICE CEILING A binding price ceiling is a price set below the equilibrium price level. o A ceiling above the equilibrium price is not binding o The quantity demanded is greater than the quantity supplied o A shortage occurs (Quantity Demanded – Quantity Supplied) = Shortage value o Non-price factor determining who gets the available quantity o A Price Ceiling creates… Shortages Gasoline shortages of the 1970s Non-Price Rationing Long Lines Discrimination criteria set by seller Rent Control The supply in the short-run remains inelastic The supply in the long-run becomes elastic over time o Landlords have time to adjust to the new price ceiling Allow tenants to buy out the apartment (condo)
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This note was uploaded on 04/15/2008 for the course ECON 101 taught by Professor Golden during the Fall '07 term at Allegheny.

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Class Notes - 9-21-07 - Macroeconomics Class Notes 9/21/07...

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