Demand and Supply Analysis Introduction II
About the Lecture
The lecture Demand and Supply Analysis Introduction II by Edu Pristine is from the course Archiv - Economics. It contains the following chapters:
- Demand or Supply Imbalance
- Price Celling and Price Floor
- Incidence of Tax
- Subsidies
- Production Quotas
Author of lecture Demand and Supply Analysis Introduction II
Edu Pristine
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Excerpts from the accompanying material
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... demand or supply imbalance that affects a good or ...
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... benefits " Government restrictions in the form of taxes, subsidies, quotas, price ceiling, price floor all cause a imbalance i n the quantity demanded and quantity supplied. " These restriction create a dead weight loss. Inefficiency occurs because of :6 Price Ceiling : Eg- Rent control 6 ...
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... an economic efficiency NOT caused byA. Highly ...
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... " In the Iron ore mining industry, environmental reclama tion costs to restore the natural habitat after the mine has been closed are indirectly borne by citizens who do not receive an y direct benefit from the mine s production. As a result o f the reclamation costs, which of the following is most likely to ...
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... ore. So reclamation costs are external cost. Producers in mining industry are not going to consider the reclamation costs when determining the amount of iron ore supply to the market, The result is production in excess of the efficient quantity. When overproduction occurs, marginal cost exceeds marginal benefit when the quantity produced and creating a deadweight loss. ...
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... Describe the impact of government regulation and intervention on demand and supply Forecast the effect of the introduction ...
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... ceiling above the equilibrium price (EP): No effect " Price ceiling below the Equilibrium Price: Supply will fall short of demand In such a situation consumers will be willing to pay an opportunity cost to make purchases Causing deadweight losses due to reduction in ...
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... Price (Minimum) DemandSupply Impact of Price Floor Price " A price floor is a minimum price that a buyer can offer for a good, service, or resource. " PF < EP = No effect " PF > EP = Supply will exceed demand at the floor ...
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... Actual and statutory incidence of tax: Actual: Who actually bears tax buyer in the form of high prices paid or seller in the form of less prices received Statutory: ...
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... tax revenue from the buyers. " Statutory tax on the producer results in the shift in su pply curve towards left. " Now the equilibrium price becomes P Taxinstead of P E, which results in decreased equilibrium production(Q Tax) " Now the difference between new price P ...
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... the buyer. Therefore actual incidence of tax on the producer becomes P E-P S " In frictionless market the efficient quantity to be prod uced should be Q Ebut the actual quantity produced is less than the efficient quantity which results in Dead Weight Loss define d ...
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... is steeper) than demand, consumers will bear lower taxes than suppliers If demand is Less elastic (i.e., the demand curve is steeper) than supply, opposite occurs " High inelasticity causes less deadweight loss becau se It occurs due to lack of substitutes or options with suppliers or /and ...
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... D tax Tax revenue from sellers Tax revenue from buyers Ptax P E P s D tax Inelastic Supply Curve Price SD DWL ...
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... to a deadweight loss from overproduction. " Through subsidies, governments compensates producers for difference between actual price of the goods and price a t which goods sold. " A subsidy ...
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... ($ per ton) S - Subsidy 12 $30subsidy Dead weight loss ...
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... allocation of resources and a deadweight loss to the economy "
