Handout2 - who buy rice Taxes The government decides it...

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Lecture 2 Overview What is the role of Gov’t in market economy? Regulator: 1. 2. 3. Equalizer: 1. 2. 3. Price Ceilings Suppose that in the CE, the market price was $1 and 10,000 bags of rice was sold. Now the government imposes a price ceiling of 0.50c.
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Econ 1102-025 Page 2 of 3 Price Control Alternative Suppose that instead of a price ceiling, the government offers to refund a $0.50c rebate to consumers
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Unformatted text preview: who buy rice. Taxes The government decides it needs to increase its tax revenue, and decides to start taxing rice farmers 0.50c for every bag of rice they sell. Now what happens? Econ 1102-025 Page 3 of 3 Supply Side Changes Suppose the government manages to increase the supply of rice Price Floors Suppose the government sets a minimum wage of $1....
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