Chapter 6

Chapter 6 - incentive If min wage is above equilibrium...

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Chapter 6 Price control : ceiling/floor causes shortage/surplus (only binding is it affects the equilibrium); inefficient strategy *shortage = sellers ration the goods Price ceiling on rent in the short run causes a shortage, but in the long run landlords do not build new apartments or maintain existing ones due to the loss of
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Unformatted text preview: incentive If min. wage is above equilibrium there is a surplus; resulting in unemployment (especially low skilled workers) The tax burden is shared between seller + buyer (buyers pay more, sellers get less) * discourages market activity; less is sold * regardless on how it’s levied Tax falls more on the inelastic side...
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This note was uploaded on 04/02/2010 for the course AGEC 200 taught by Professor Anwarnaseem during the Winter '10 term at McGill.

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Chapter 6 - incentive If min wage is above equilibrium...

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