Thursday, September 29, 2016

Chapter 6 blog

The chapter describes how the government can intervene in the market. However, it says multiple times the government shouldn't.
There are price floors to place minimum prices on goods.
There are also price ceilings to place maximums on goods.
These can lead to both surpluses and shortages.
Taxes puts a wedge in between what buyers pay and what sellers receive.
Taxes split the burden between the buyers and sellers, however the inelastic part of the trade takes the most burden.

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