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Chapters 18 _ 19, March 8 _ 10th

Chapters 18 _ 19, March 8 _ 10th - 3rd method to...

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Econ 100A Microeconomics Professor Sarah Reynolds Department of Economics University of California, Berkeley Textbook by Thomas Nechyba Elasticities, Price-Distorting Policies, and Non-Price Rationing Chapter 18 - March 8th, 2011 Elasticity Formula: Perfectly Elastic Perfectly Inelastic Demand Example: Demand Example: Supply Example: Supply Example:
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p p x x Elasticity changing over the range of p Demand Supply Relating to consumer spending Relating to producer revenue Price Floor Price Ceiling Identify the deadweight loss in disequilibrium. 1 st method to equilibrium: Deadweight loss= p p x x
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Price Floor Price Ceiling 2nd method to equilibrium: Deadweight loss= What happens to the deadweight loss under different elasticities? Price Floor Price Ceiling p p x x p p x x
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Price Floor Price Ceiling
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Unformatted text preview: 3rd method to equilibrium: Original surplus w/o intervention= Under intervention: Consumer surplus= Producer surplus= Government expenses= DWL if dump surplus in ocean= DWL if redistribute efficiently= p p x x Econ 100A Microeconomics Professor Sarah Reynolds Department of Economics University of California, Berkeley Textbook by Thomas Nechyba Distortionary Taxes & Subsidies Chapter 19 - March 10th, 2011 Tax on Producers Tax on Consumers How is the tax burden divided? What is the deadweight loss? Subsidy for Producers Subsidy for Consumers How is the subsidy benefit divided? What is the deadweight loss? p p x x p p x x Changing Elasticities Subsidy for Producers Subsidy for Consumers How is the subsidy benefit divided? How is tax revenue affected by elasticities? p p x x...
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