econ exam 2 review - Clague Economics 102 Exam 2 Review on...

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Clague- Economics 102 Exam 2 Review on Taxation Chapter 6 Price ceiling= excess demand Price floor= excess supply Rent control in part of market causes vertical supply curve of uncontrolled part to  shift left & rent to be higher in uncontrolled parts Tax paid on buyers shifts demand curve down by amount of tax Study of who bears burden of tax Tax on sellers shifts supply curve up Tax   incidence -manner in which burden of tax is shared in market Who pays the tax has no effect Elastic - highly responsive to changes in the price charged. Tax burden falls more heavily on side that is less elastic (steeper curve) Inelastic - unresponsive/not change much when price changes Steeper curve More elastic supply/demand curves, greater decline in Q caused by tax, greater  deadweight loss If govt. imposes price floor above equilibrium price, Qs will rise more in long run than 
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