Chap_06Supply,DemandandGovernmentPolicies(曼昆

1、Supply, Demand and Government PoliciesChapter 61Supply, Demand, and Government PoliciesIn a free, unregulated market system, market forces establish equilibrium prices and exchange quantities.While equilibrium conditions may be efficient, it may be true that not everyone is satisfied. One of the rol

2、es of economists is to use their theories to assist in the development of policies.2Price Controls.Are usually enacted when policymakers believe the market price is unfair to buyers or sellers. Result in government-created price ceilings and floors. 3Price Ceilings & Price FloorsPrice Ceiling A lega

3、lly established maximum price at which a good can be sold. Price FloorA legally established minimum price at which a good can be sold.4Price CeilingsTwo outcomes are possible when the government imposes a price ceiling: The price ceiling is not binding if set above the equilibrium price. The price c

4、eiling is binding if set below the equilibrium price, leading to a shortage. 5A Price Ceiling That Is Not Binding.$43Quantity ofIce-CreamCones0Price ofIce-CreamConeDemandSupplyPriceceilingEquilibriumprice100EquilibriumquantityHarcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc.6A

5、Price Ceiling That Is Binding.$3Quantity ofIce-CreamCones0Price ofIce-CreamCone2DemandSupplyEquilibriumpricePriceceilingShortage125Quantitydemanded75QuantitysuppliedHarcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc.7Effects of Price CeilingsA binding price ceiling creates . shor

6、tages because QD QS.Example: Gasoline shortage of the 1970s nonprice rationingExamples: Long lines, Discrimination by sellers8Lines at the Gas PumpIn 1973 OPEC raised the price of crude oil in world markets. Because crude oil is the major input used to make gasoline, the higher oil prices reduced th

7、e supply of gasoline.What was responsible for the long gas lines?Economists blame government regulations that limited the price oil companies could charge for gasoline.9The Price Ceiling on Gasoline Is Not Binding.$4P1Quantity ofGasoline0Price ofGasolineQ1DemandSupplyPriceceiling1. Initially, the pr

8、ice ceiling is not binding.10The Price Ceiling on Gasoline Is Binding.P1Quantity ofGasoline0Price ofGasolineQ1DemandS1PriceceilingS22. but when supply falls.P23. the price ceiling becomes binding.4. resulting in a shortage.11Rent ControlRent controls are ceilings placed on the rents that landlords m

9、ay charge their tenants.The goal of rent control policy is to help the poor by making housing more affordable.One economist called rent control “the best way to destroy a city, other than bombing.12Rent Control in the Short Run.Quantity ofApartments0Rental Price ofApartmentDemandSupplyControlled ren

10、tShortageSupply and demand for apartments are relatively inelastic13Rent Control in the Long Run.Quantity ofApartments0Rental Price ofApartmentDemandSupplyControlled rentShortageBecause the supply and demand for apartments are more elastic.rent control causes a large shortage14Price FloorsWhen the g

11、overnment imposes a price floor, two outcomes are possible.The price floor is not binding if set below the equilibrium price.The price floor is binding if set above the equilibrium price, leading to a surplus. 15A Price Floor That Is Not Binding.$3Quantity ofIce-CreamCones0Price ofIce-CreamCone100Eq

12、uilibriumquantityEquilibriumpriceDemandSupplyPricefloor216A Price Floor That Is Binding.$3Quantity ofIce-CreamCones0Price ofIce-CreamConeEquilibriumpriceDemandSupplyPrice floor$4120Quantitysupplied80QuantitydemandedSurplusHarcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc.17Effec

13、ts of a Price FloorA price floor prevents supply and demand from moving toward the equilibrium price and quantity.When the market price hits the floor, it can fall no further, and the market price equals the floor price. 18Effects of a Price FloorA binding price floor causes . . . a surplus because

14、QS QD. nonprice rationing is an alternative mechanism for rationing the good, using discrimination criteria.Examples: The minimum wage, Agricultural price supports 19The Minimum WageAn important example of a price floor is the minimum wage. Minimum wage laws dictate the lowest price possible for lab

15、or that any employer may pay.20The Minimum WageQuantity ofLabor0WageEquilibriumwageLabor demandLabor supplyA Free Labor MarketEquilibriumemployment21MinimumwageThe Minimum WageQuantity ofLabor0WageLabor demandLabor supplyQuantitysuppliedQuantitydemandedLabor surplus(unemployment)A Labor Market with

16、a Minimum Wage22TaxesGovernments levy taxes to raise revenue for public projects. 23What are some potential impacts of taxes?Taxes discourage market activity.When a good is taxed, the quantity sold is smaller. Buyers and sellers share the tax burden.24TaxesTax incidence is the study of who bears the

17、 burden of a tax. Taxes result in a change in market equilibrium.Buyers pay more and sellers receive less, regardless of whom the tax is levied on. 25Impact of a 50 Tax Levied on Buyers.3.00Quantity ofIce-Cream Cones0Price ofIce-CreamCone100D1Supply, S1A tax on buyersshifts the demandcurve downwardb

18、y the size ofthe tax ($0.50).D2Copyright 2001 by Harcourt, Inc. All rights reserved263.00Quantity ofIce-Cream Cones0Price ofIce-CreamCone10090$3.30PricebuyerspayD1D2Equilibriumwith taxSupply, S1Equilibrium without taxImpact of a 50 Tax Levied on Buyers.2.80PricesellersreceiveCopyright 2001 by Harcou

19、rt, Inc. All rights reservedPricewithouttax Tax ($0.50)27What was the impact of tax?Taxes discourage market activity.When a good is taxed, the quantity sold is smaller. Buyers and sellers share the tax burden.283.00Quantity ofIce-Cream Cones0Price ofIce-CreamCone10090S1S2Demand, D1Impact of a 50 Tax

20、 on Sellers.Price without tax2.80Price sellers receive$3.30Price buyers payEquilibrium without taxCopyright 2001 by Harcourt, Inc. All rights reservedA tax on sellers shifts the supply curve upward by the amount of the tax ($0.50). Tax ($0.50)Equilibriumwith tax29A Payroll TaxQuantity ofLabor0WageWa

21、ge without taxLabor demandLabor supplyTax wedgeWage firms payWage workers receive30The Incidence of TaxIn what proportions is the burden of the tax divided?How do the effects of taxes on sellers compare to those levied on buyers?The answers to these questions depend on the elasticity of demand and t

22、he elasticity of supply.31Elastic Supply, Inelastic Demand.Quantity0PriceDemandSupplyTax1. When supply is moreelastic than demand.2. .theincidence of thetax falls moreheavily onconsumers.3. .than onproducers.Price without taxPrice buyers payPrice sellers receive32Inelastic Supply, Elastic Demand.Qua

23、ntity0PriceDemandSupplyPrice without taxTax1. When demand is moreelastic than supply.2. .theincidence of the tax falls more heavily on producers.3. .than on consumers.Price buyers payPrice sellers receive33So, how is the burden of the tax divided?The burden of a tax falls more heavily on the side of

24、 the market that is less elastic.34SummaryPrice controls include price ceilings and price floors. A price ceiling is a legal maximum on the price of a good or service. An example is rent control.A price floor is a legal minimum on the price of a good or a service. An example is the minimum wage.35Su

25、mmaryTaxes are used to raise revenue for public purposes.When the government levies a tax on a good, the equilibrium quantity of the good falls.A tax on a good places a wedge between the price paid by buyers and the price received by sellers.36SummaryThe incidence of a tax refers to who bears the bu

26、rden of a tax.The incidence of a tax does not depend on whether the tax is levied on buyers or sellers.The incidence of the tax depends on the price elasticities of supply and demand.37Graphical Review38A Price Ceiling That Is Not Binding.$43Quantity ofIce-CreamCones0Price ofIce-CreamConeDemandSuppl

27、yPriceceilingEquilibriumprice100EquilibriumquantityHarcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc.39A Price Ceiling That Is Binding.$3Quantity ofIce-CreamCones0Price ofIce-CreamCone2DemandSupplyEquilibriumpricePriceceilingShortage125Quantitydemanded75QuantitysuppliedHarcourt,

28、 Inc. items and derived items copyright 2001 by Harcourt, Inc.40The Price Ceiling on Gasoline Is Not Binding.$4P1Quantity ofGasoline0Price ofGasolineQ1DemandSupplyPriceceiling1. Initially, the price ceiling is not binding.41The Price Ceiling on Gasoline Is Binding.P1Quantity ofGasoline0Price ofGasol

29、ineQ1DemandS1PriceceilingS22. but when supply falls.P23. the price ceiling becomes binding.4. resulting in a shortage.42Rent Control in the Short Run.Quantity ofApartments0Rental Price ofApartmentDemandSupplyControlled rentShortageSupply and demand for apartments are relatively inelastic43Rent Contr

30、ol in the Long Run.Quantity ofApartments0Rental Price ofApartmentDemandSupplyControlled rentShortageBecause the supply and demand for apartments are more elastic.rent control causes a large shortage44A Price Floor That Is Not Binding.$3Quantity ofIce-CreamCones0Price ofIce-CreamCone100Equilibriumqua

31、ntityEquilibriumpriceDemandSupplyPricefloor245A Price Floor That Is Binding.$3Quantity ofIce-CreamCones0Price ofIce-CreamConeEquilibriumpriceDemandSupplyPrice floor$4120Quantitysupplied80QuantitydemandedSurplusHarcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc.46The Minimum WageQ

32、uantity ofLabor0WageEquilibriumwageLabor demandLabor supplyA Free Labor MarketEquilibriumemployment47The Minimum WageMinimumwageQuantity ofLabor0WageLabor demandLabor supplyQuantitysuppliedQuantitydemandedLabor surplus(unemployment)A Labor Market with a Minimum Wage48Impact of a 50 Tax Levied on Buyers.3.00Quantity ofIce-Cream Cones0Price ofIce-CreamCone100D1Supply, S1A tax on buyersshifts the demandcurve downwardby the size ofthe tax ($0.50).D249Impact of a 50 Tax Levied on Buye