What happens when a price ceiling is set below the market equilibrium - making the equilibrium pice illegal in the market. This creates shortage, but what about changes in consumer and producer surplus and is there any dead weight loss? How do we measure these.
- Economically or Socially Sound?
The Economics of it - If you make something expensive (workers) less people would want to buy it (Businesses will reduce their demand for labor services).
- Is it the complete story? - Would adjusting the minimum wage change work incentives? Would it make content workers more productive?
- If we want to maximize the country's welfare - Doesn't a humane minimum wage secure the social fabric of a country.
Agriculture Subsidies - A case study of the United States.
Focus - Sugar Industry.
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So, what's the elasticity of a linear demand function?
How do you measure it?
How do you define supply elasticity?
How do you measure it?
What influences the elasticity?
Tax on the suppliers.
Shifts the supply function up by the amount of the tax. Consumer surplus and Producer surplus decreases, tax revenue is generated and we are left with a dead weight loss.
A sales tax on consumers raises the equilibrium price.
think of a downward shift of the demand function by the amount of sales tax.
Tax burden is distributed between consumers and producers irrespective of who pays the tax.
Do the real events and its consequences hold ground under our Micro microscope.
All right ! All right !
Well As we know from our video tutorials the tax burden would be shared by the two groups (consumers and producers). Who pays more would depend on the responsiveness or price sensitivity of the two groups - i.e. the elasticity of demand and supply.
The PP graph has a negative slope and the relationship is negative - please take a note.
Review of monopolistic competition in light of the Krugman Trade Model.
Average Cost and Price Graphs.
Changes in consumer and producer surplus.
What happens when a price ceiling is set below the market equilibrium - making the equilibrium pice illegal in the market. This creates shortage, but what about changes in consumer and producer surplus and is there any dead weight loss? How do we measure these.
Demand equation; Supply Function - Step function
Answer sheet: http://tinyw.in/BMHp
Large Country trading with a small country. Small country specializes and large country produces both the goods.
ABN's Uche Okoronkwo speaks with Yewande Onasanya, an analyst with UBA, to discuss soft commodities in the West African region and their performance on the international front.