A legal Maximum on the price at which a good can be sold
A legal Minimum on the price at which a good can be sold
Not Binding Price Ceiling
The equilibrium price is below the ceiling.
Causes a surplus
Binding Price Ceiling
The equilibrium price is above the ceiling.
Causes a shortage
Binding Price Floor
The equilibrium price is below the floor.
Causes a surplus.
Not Binding Price Floor
The equilibrium price is above the floor.
Causes a shortage.
The manner in which the burden of a tax is shared among participants in a market.
Depends on the elasticities of the supply and demand curves.
Taxes on Buyers & Sellers
The only difference between a tax on a buyer & tax on a seller is who sends the money to the government.
They share the burden of the tax.
A tax on the wages that firms pay their workers.
Earned Income Tax Credit
A government program that supplements the income of low-wage workers
Reasons To Tax
1. To Raise Revenue
2. To Alter Quantity
The difference between what the buyers pay for a good and what the sellers receive for a good
A benefit given by the government to groups or individuals usually in the form of a cash payment or tax reduction.
The opposite of a tax because the government is spending, which means the government surplus is negative. Generally meant to benefit consumers.