ECON200 NOTES 2 19 13 Welfare Economics Tax Analysis Part II Price Controls Quantity Controls Price Controls Price ceilings prices above which the price cannot rise MAXIMUM price ex rent control in NYC Price floors price below which the price cannot fall MINIMUM price Quantity Controls Government passes a law saying a certain quantity is not allowed to rise over a certain level import level firm cannot import more than X amount of cards Ex taxi cabs legal cab has medallion number of medallions is fixed 11 787 in 1941 perfectly inelastic straight vertical line this market will always clear when supply is equal to demand WELFARE ECONOMICS Welfare economics the study of how the allocations of resources affect the economy economic well being Markets are usually a good way to organize economic activity Willingness To Pay the maximum amount that a consumer is willing to pay will pay for a good The value one places on a particular good Consumer Surplus hh Producer Surplus jj Total Surplus hh Efficiency hh What is required for efficiency jj How markets can lead to efficiency hh Qualifications Caveats hh
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