Price control tax and subsidies

Price control tax and subsidies - Q2 Q1 D Cost to the...

Info iconThis preview shows pages 1–13. Sign up to view the full content.

View Full Document Right Arrow Icon
Session VII: Price Control, Tax  and Subsidy PGP I Term I
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Consumer and producer  Surplus Producer  surplus A B C E 50 40 30 Consumer  surplus D1 S1 Q P
Background image of page 2
Impact of price control Pma x A B C Deadweight  loss D1 S1 Q P P 1 Shortage Q3 Q2 Q1 ΔCS=-A-B ΔPS=A-C ΔTS=-B-C
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Inefficient allocation among consumers Inefficient allocation of resources due to non- production and or non-consumption.  Black market activity Impact of price control
Background image of page 4
Impact of price control when  demand is inelastic Pma x A B C Deadweight  loss D1 S1 Q P P 1 Q3 Q2 Q1 D0
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Minimum price Pmi n A B C D1 S1 Q P P 1 Q3 Q2 Q1 D ΔCS=-A-B ΔPS=A-C-D E F
Background image of page 6
Govt. Price support programme Psuppo rt A B C D1 S1 Q P P 1 Q3 Q2 Q1 D ΔCS=-A-B ΔPS=A+B+D Govt’s cost=(Q2-Q1)Psupport Qg D1+Qg
Background image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Supply restrictions Psuppo rt A B C D1 S1 Q P P 1 Q3
Background image of page 8
Background image of page 9

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Background image of page 10
Background image of page 11

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Background image of page 12
Background image of page 13
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Q2 Q1 D Cost to the Govt=B+C+D S2 Incidence of a tax Ps A B C Deadweight loss D1 S1 Q P P P b Q0 Q1 D C tax Linear demand curve d b dt c a t d b bt c a P d b bt c a P dP c t t P P dP c bP a D S S S D S D + +-= + +--= +--= + = + + = + =-* * S and price supply m equilibriu for Solving ) b(P-a (1) into (2) ng Substituti tax t, a For Pass through fraction D S D D S S E E E E E E--=-= seller for fraction through Pass buyer for fraction through Pass Effect of a subsidy P b D1 S1 Q P P Ps Q0 Q1 subsidy Impact of Import quota=0 P A B C Deadweight loss D1 S1 Q P P 1 Import Q3 Q2 Q1...
View Full Document

Page1 / 13

Price control tax and subsidies - Q2 Q1 D Cost to the...

This preview shows document pages 1 - 13. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online