chap_06supply,demandandgovernmentpolicies(曼昆.ppt

Supply, Demand and Government Policies Chapter 6 Supply, Demand, and Government Policies In a free, unregulated market system, market forces establish equilibrium prices and exchange quantities. While equilibrium conditions may be efficient, it may be true that not everyone is satisfied. One of the roles of economists is to use their theories to assist in the development of policies. Price Controls... Are usually enacted when policymakers believe the market price is unfair to buyers or sellers. Result in government-created price ceilings and floors. Price Ceilings Price Floors Price Ceiling A legally established maximum price at which a good can be sold. Price Floor A legally established minimum price at which a good can be sold. Price Ceilings Two outcomes are possible when the government imposes a price ceiling: ? The price ceiling is not binding if set above the equilibrium price. ? The price ceiling is binding if set below the equilibrium price, leading to a shortage. A Price Ceiling That Is Not Binding... A Price Ceiling That Is Binding... Effects of Price Ceilings A binding price ceiling creates ... shortages because QD QS. Example: Gasoline shortage of the 1970s nonprice rationing Examples: Long lines, Discrimination by sellers Lines at the Gas Pump The Price Ceiling on Gasoline Is Not Binding... The Price Ceiling on Gasoline Is Binding... Rent Control Rent controls are ceilings placed on the rents that landlords may charge their tenants. The goal of rent control policy is to help the poor by making housing more affordable. One economist called rent control “the best way to destroy a city, other than bombing.” Rent Control in the Short Run... Rent Control in the Long Run... Price Floors When the government imposes a price floor, two outcomes are possible. The price floor is not binding if set below the equilibrium price. The price floor is binding if set above the equilibrium price, leading to a surplus. A Price Floor That Is Not Bindin