Microeconomics Week 6 Chapter 6 微观经济 讲解材料.ppt

* * Explain that because landlords can’t be forced to supply a greater quantity than they wish, the quantity of housing supplied at the rent ceiling is less than the quantity that would be supplied in an unregulated market. * * * * * * * * * * * * * * * * * Talk about the study of wage and employment data by David Card and Alan Krueger (Myth and Measurement: The New Economics of the Minimum Wage Law, Princeton: Princeton University Press, 1995), which suggests that minimum wage laws do not cause unemployment. Note that other economists disagree and claim that ceteris paribus conditions were violated regarding: the timing of hiring decisions regional differences * * * * * * * * * * * * * * The market price paid by buyers rises to $4.00 a pack and the quantity bought decreases. The price received by the sellers falls to $2.50 a pack. So with the tax of $1.50 a pack, buyers pay $1.00 a pack more and sellers receive 50￠ a pack less. Taxes A Tax on Buyers Again, with no tax, the equilibrium price is $3.00 a pack. A tax on buyers of $1.50 a pack is introduced. Demand decreases and the curve D ? tax on buyers shows the new demand curve. Taxes The price received by sellers falls to $2.50 a pack and the quantity decreases. So with the tax of $1.50 a pack, buyers pay $1.00 a pack more and sellers receive 50￠ a pack less. The price paid by buyers rises to $4.00 a pack. Taxes So, exactly as before when sellers were taxed: Buyers pay $1.00 of the tax. Sellers pay the other 50￠ of the tax. Tax incidence is the same regardless of whether the law says sellers pay or buyers pay. Taxes Tax Division and Elasticity of Demand The division of the tax between buyers and sellers depends on the elasticities of demand and supply. To see how, we look at two extreme cases. Perfectly inelastic demand: Buyer pay the entire tax. Perfectly elastic demand: Sellers pay the entire tax. The more inelastic the demand, the larger is the buyers’ share of the tax. Taxes Demand for this good is perfect