cp 6 Flashcards
1
Q
Price ceiling
A
a legal maximum on the price
of a good or service.
2
Q
price floor
A
a legal minimum on the price of
a good or service.
3
Q
binding
A
there is an effect from the price control (shortage from the ceiling) (surplus from the floor)
non binding–> no effect
4
Q
economist are skeptical od control prices because…
A
they distort the allocation of resources
5
Q
when govt puts tax on good then equilibrium price _____. and it ______ the market.
A
1) falls
2) shrinks
6
Q
tax on good places a wedge between…
A
price paid by buyers and price received by sellers.
7
Q
tax incedence is
A
the division of tax
8
Q
tax incedence depands on the elasticities on supply and demand. the burden falls more on the side with _____ elasticity.
A
less.
