Chapter 4 Applications of Demand and Supply Sole proprietorship situation in which one individual owns a firm Partnership situation in which several individuals own a firm Corporation situation in which shareholders own stock in a firm Corporate stocks shares in the ownership of a corporation Stock market set of institutions in which shares of stock are bought and sold Retained earnings profits not paid out in dividends Dividends profits distributed to shareholders Price floor minimum allowable price set above the equilibrium price o Meant to protect the seller Creates a surplus The purpose of rent control is to make rental units cheaper for tenants than they would otherwise be Rent control is an example of a price ciling o Price ceiling maximum allowable price set below the equilibrium price Established when the govt feels when the equilibrium market price is too high for buyers Creates a shortage There has been much discussion over the past three decades about the health care problem in the United States Much of this discussion has focused on rising spending for health care To assess the market forces affecting health care we will focus first on just one of these markets the market for physician office visits Third party payer agent other than the seller or the buyer who pays part of the price of a good or service Consumers use more than they would in the absence of third party payers o Providers are encourage to supply more than they otherwise would The result is increased total spending
View Full Document
Unlocking...