Ch.4_The Market Strikes Back

Ch.4_The Market Strikes Back - Chapter 4 The Market Strikes...

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Chapter 4 The Market Strikes Back I. Price Controls: legal restriction on how high or low a market price can go. 2 Types: 1. Price Ceilings : Maximum Price a seller can charge for a product or service. A. Example Rent Controls in NYC If Binding creates: B. Problems with Price Ceilings 1) Inefficient Allocation to consumers 2) Inefficient Low Quality 3) Wasted Resources 4) Black Markets
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Chapter 4 The Market Strikes Back 2. Price Floors : A minimum Price imposed by Gov’t. A. Example If Binding Creates:
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Chapter 4 The Market Strikes Back B. Problems with Price Ceilings 1) Inefficient Allocation to sales among Sellers 2) Inefficient High Quality 3) Wasted Resources 4) Black Markets II. Quantity Controls: legal restriction on how Many can be traded. 2 Types:
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Unformatted text preview: Chapter 4 The Market Strikes Back The market for taxi rides in Metropolia Price of Taxi Rides Quantity Demanded Quantity Supplied 1 200 40 2 180 60 3 160 80 4 140 100 5 120 120 6 100 140 7 80 160 8 60 180 9 40 200 10 20 220 1. What is the equilibrium price and the equilibrium quantity of taxi rides in Metropolia? Suppose the government of Metropolia institutes a medallion system that limits the number of taxi rides available in Metropolia per week to 80 taxi rides. 2. At what price will consumers want to purchase 80 taxi rides per week? At what price will suppliers be willing to supply 80 taxi rides per week? 3. What price will a taxi medallion rent for in this market? Explain your answer....
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Ch.4_The Market Strikes Back - Chapter 4 The Market Strikes...

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