T2 Government intervention Flashcards
1
Q
What is the impact of taxes on market equilibrium
A
It results in dead weight loss.
Taxes will cut into the income of producers and part of the price will be passed along to consumers
2
Q
What is the price floor
A
It is a legal requirement that prevents prices from being set less than a specified level
3
Q
What shifts the market away from its natural equilibrium
A
Government intervention
