Scribd
Upload
46 views10 pages

Market Distortions: Fabrizio Pliego Economics and The State Fall 2007

The document discusses different types of market distortions caused by government intervention, including price controls, taxes, and subsidies. It explains how price ceilings can create surpluses while price floors can create shortages. The effects of taxes and subsidies on both consumers and producers are depicted graphically based on the elasticity of demand and supply. Maximum and minimum price controls are also illustrated on supply and demand diagrams.

Uploaded by

Pau Serrano
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
46 views10 pages

Market Distortions: Fabrizio Pliego Economics and The State Fall 2007

The document discusses different types of market distortions caused by government intervention, including price controls, taxes, and subsidies. It explains how price ceilings can create surpluses while price floors can create shortages. The effects of taxes and subsidies on both consumers and producers are depicted graphically based on the elasticity of demand and supply. Maximum and minimum price controls are also illustrated on supply and demand diagrams.

Uploaded by

Pau Serrano
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
You are on page 1/ 10

Market Distortions

Fabrizio Pliego
Economics and the State
Fall 2007
The goverment as a
regulatory system
 Price top
 Price bottom

 Subsides

 Taxes
Taxes

 Restrictive
 Recaudatory
Taxes

P
10

OS22
9

S11
O
8
7

e2
6

a b
5

e1
4

c
d
3
2

D1
1

1 2 3 4 5 6 7 8 9 10
Q
Tax sharing
Completely Very Inelstic Neutral Very Elastic Completely
Inestic Elasticity Elastic

Consumer Pays all Pays major Pays the Pays minor Doesn’t pay
part same part at all

Producer Doesn’t pay Pays minor Pays the Pays major Pays all
at all part same part
Subside (goverment help)

P
10

OS11
9

OS22
8
7

e1
6

a b
5

e2
4

c
d
3
2

D1
1

1 2 3 4 5 6 7 8 9 10
Q
Help Sharing
Completely Very Inelstic Neutral Very Elastic Completely
Inestic Elasticity Elastic

Consumer Receives total Recieves most Recieves the Recieves Doesn’t


part same minor Receive
part anything

Producer Doesn’t Recieves Recieves the Recieves most Receives total


Receive minor same part
anything part
Maximum Prices

•Equilibrium
P
10

vs. Fairnes
9

OS21 •Black Market


8

Price and
7

quantity
6

b
5

e1
4

c
PMax
a
3
2

D1
1

1 2 3 4 5 6 7 8 9 10
Q
Maximum prices in an
inelastic market
O2
S1
P
10
9
8
7

b
6

c
5

e1
4

PMax
a
3
2

D1
1

1 2 3 4 5 6 7 8 9 10
Q
Minimum prices

P
10
9

OS2 1
8
7
6

b
5

e1 PMin
4
3

a
2

D1
1

1 2 3 4 5 6 7 8 9 10
Q

You might also like

pFad - Phonifier reborn

Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.

Note: This service is not intended for secure transactions such as banking, social media, email, or purchasing. Use at your own risk. We assume no liability whatsoever for broken pages.


Alternative Proxies:

Alternative Proxy

pFad Proxy

pFad v3 Proxy

pFad v4 Proxy