lec03 - D Q P S1 S2 $1.20 8 b $1.00 $0.70 Producers receive...

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1 Demand and Supply Applications 4 Less steep D Steeper D Q P With steep demand curve, quantity demanded drops only a little. Demand Responsiveness 6 Less steep D Steeper D Q P With less steep demand curve, quantity demanded drops much more. Demand Responsiveness 10 Q P Steeper S Less Steep S With steep S, quantity supplied rises little. Supply Responsiveness 11 Q P Steeper S Less Steep S With less steep S, quantity supplied rises a lot. Supply Responsiveness 12 Rent Control Bedroom Bath Living Room/ Kitchen
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13 D Q P S Equilibrium without Rent Control P1 Q1 16 D Q P S Excess Demand under Rent Control P1 Q1 PC QC Excess demand 17 D Q P S Rent Control with Steep Supply Curve P1 Q1 PC QC 18 Excise Tax A per-unit tax on a good. Example: gas tax of 50 cent per gallon. 19 Equilibrium before tax D Q P S1 $1.00 10 b 20 Excise tax causes supply curve to shift up by amount of tax. D Q P S1 S2 $0.50 $0.50
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22 Price rises by LESS than the amount of tax. D Q P S1 S2 $1.20 8 b $1.00 10 b $0.50 $0.20 23 Tax Burden is Shared by Consumers and Producers D Q P S1 S2 $1.20 8 b $1.00 Consumers pay 20 cents more per gallon. 24 Tax Burden is Shared by Consumers and Producers
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Unformatted text preview: D Q P S1 S2 $1.20 8 b $1.00 $0.70 Producers receive 30 cents less per gallon. 25 Tax Burden is Shared by Consumers and Producers D Q P S1 S2 Consumers Tax Burden Producers Tax Burden 26 When demand curve is steep consumers pay most of tax burden. D Q P S1 S2 Consumers tax burden Producers tax burden 27 When demand curve is relatively flat producers pay most of tax burden. D Q P S1 S2 Consumers tax burden Producers tax burden 28 When supply curve is steep producers pay most of tax burden. D Q P S1 S2 Consumers tax burden Producers tax burden 29 When supply curve is relatively flat consumers pay most of tax burden. D Q P S1 S2 Consumers tax burden Producers tax burden 30 To make consumers pay most of tax: Place tax on goods with steep demand or relatively flat supply. To make producers pay most of tax: Place tax on goods with steep supply or relatively flat demand....
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This note was uploaded on 04/03/2008 for the course ECON 1 taught by Professor Martholney during the Fall '08 term at University of California, Berkeley.

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lec03 - D Q P S1 S2 $1.20 8 b $1.00 $0.70 Producers receive...

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