Price Control
Price Floor/Sale Tax
Price Ceilings/Sale Tax
Sale Tax
100
At this price point, no shortage or surplus exists.
EQUILIBRIUM?
100
QS exceeds QD
What is SURPLUS?
100
Price ceilings result in ....
SHORTAGE
100
Government always implement sale tax on __ good
Demerit
200
When the line is above the equilibrium - price floor or price ceiling?
PRICE FLOOR?
200
The government is trying to protect__ when imposing minimum price.
SELLERS/producers
200
What happens to the market when there is a surplus when minimum price is implemented?
Producers can't reduce the price so they could sell it in a black market or exit the market altogether.
200
What is the short term benefit for the government if sale tax is implemented?
Tax revenue
300
The implementer of price controls.
Who is THE GOVERNMENT?
300
The term when the government does not intervene and let the buyers set whatever price they desire.
Free Market
300
How do we calculate Consumer spending BEFORE sale tax
Pe x Qe
300
To calculate consumers spending after tax... __x___
pe1xqe1
400
What is Black Market?
Where sellers sell above the maximum price/below the min price to the consumers
400
How do we calculate producers revenue after the sale tax?
PpxQe1
400
Max price is always set __ (above or below) the equilibrium
below
400
To calculate producers revenue after sale tax... ?x?
pp x Qe1
500
Another name for Maximum price.
What is PRICE CEILING?
500
How do we calculate Tax Revenue?
Tax per unit x Qe1
500
Why Minimum price is called the price floor?
Because you could not go under the price
500
Why is producers' revenue less than the consumers spending after the sale tax?
Consumers spending is what consumers spent on buying the product.
Producers revenue is less because they have to pay tax after what they have received from the consumers.