Unit 8.2 - Supply and Demand: Government Intervention Flashcards
1
Q
How does Consumer Surplus and Producer surplus differ (in supply and demand) with:
Relatively inelastic demand
Relatively inelastic supply
A
Inelastic Demand = CS > PS
Inelastic Supply = CS < PS
2
Q
What is Deadweight loss
A
A loss of total surplus relative to a Pareto-efficient allocation
3
Q
What are examples of Government Market Intervention
A
Price floors
Price Ceilings
Taxation
Entry, exit and other regulations
Quotas, coupon rationing
4
Q
What are Ad-valorem taxes
A
Each unit produced is taxed with a certain share of its value (an addition to its value)
5
Q
What are Lump-sum (specific) taxes
A
Each unit produced is taxed with a certain flat sum
