Review:Steeper Curve: less elasticFlatter Curve: more elasticMR=MCChapter 6 Taxes and Subsidies:Tax = Price paid by buyers – price received bysellersSubsidy = price received by sellers – pricepaid by buyers*When demand is more elastic than supply,demanders pay less of the tax than sellers.When supply is more elastic than demand,suppliers pay less of the tax thanbuyers*Elasticity = EscapeCommodity Tax: taxes on goods; Ex: fuel,liquor, cigarettes; raises revenue and createsDWLChapter 7 The Price System:Great Economic Problem: problem of how toarrange our limited resources to satisfy asmany of our wants as possible.The price of a good contains informationabout: The value of the good to consumersand the cost of producing the good.Speculation: the attempt to profit from futureprice changes. *can narrow pricefluctuations*Futures: standardized contracts to buy or sellspecified quantities of a commodity orfinancial instrument at a specified price with
