ec-15 - i Change market prices ii Behavior changes iii...

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P Q 2.8 032 80 10/16/08 I. Wage Warm up a. If increase minimum wage above equilibrium i. ↓ E depends on LD elasticity ii. Creates surplus of workers. U 1. Unemployment increases b. Lump of labor fallacy i. Infinite number of jobs possible, limited number of people willing II. Tax incidence a. Econ effects of taxes
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Unformatted text preview: i. Change market prices ii. Behavior changes iii. Buyer and seller made worse off- not equally so iv. Surprising result! v. What determines the burden of the tax 1. Buyer or seller III. Tax collected from sellers a. $. 50/ gallon of gas i. Shifts supply curve up by .50...
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