06ECO100OutlineInterventions

In terms of efficiency taxes and subsidies might be

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In terms of efficiency, taxes and subsidies might be preferable to “equivalent" interventions . . . Gazzale (University of Toronto) ECO100: Government Interventions 3 / 14
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Background The Big Caveat Policy makers are not implementing these policies to destroy surplus! Gazzale (University of Toronto) ECO100: Government Interventions 4 / 14
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Intervention 1: The Price Floor The Price Floor Price Floor a price control that sets a legal minimum ( P f ) on the price at which a good can be traded Binding Price Floor P f > P * Example Price stabilization policies in agriculture; minimum wage Gazzale (University of Toronto) ECO100: Government Interventions 5 / 14
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Intervention 1: The Price Floor The Binding Price Floor: Graphically Assumption: Nobody purchases excess supply Gazzale (University of Toronto) ECO100: Government Interventions 6 / 14
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Intervention 1: The Price Floor Thinking about the minimum wage Consumers of labour=firms Producers of labour=workers Minimum wage clearly harms consumers of labour ( CS ) Effect of minimum wage on workers (i.e., Producer Surplus)?
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