Economics 201 wk 5 notes
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This 1 page Class Notes was uploaded by Katie Conner on Saturday February 13, 2016. The Class Notes belongs to Econ 201 at a university taught by Donna Bueckman in Spring 2016. Since its upload, it has received 25 views.
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Date Created: 02/13/16
Econ notes week 5beginning of unit 2 Government policies that alter the private market outcome Price controls Price ceilinglegal maximum Price floorlegal minimum Taxes Buyers or sellers pay a specific amount on each unit Price ceilings Like a lid on the market How does it affect the market? can cause a shortage if demand rises above supply Shortages and rationing Rationing mechanism lines (1 come 1 serve) lottery (randomized) discrimination according to sellers biases Considered unfair and inefficient Using prices as the rationing mechanism works best (may still be unfair to some but is still best way) Price floors Ex: minimum wage How does it affect the market? will only be effective if it rises above the equilibrium
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