101 lecture 6 supply demand and government
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Microeconomics !
Lecture 6 !
Supply, Demand, and Government Policies
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Quiz Insurance !
Ali Tabbara Monday at 12 noon
S1-46 S2-41
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price ceiling price floor tax incidence
Key Terms
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1. What is the equilibrium price?
2. What is the equilibrium quantity?
3. If the market price was 80, how many pizzas would be sold?
4. If the market price was 30, how many pizza would be sold?
5. If the market price was 80, would there be a shortage, surplus, or equilibrium?
6. If the market price was 30, would there be a shortage, surplus, or equilibrium?
7. What would be the quantity demanded at a price of 80?
8. What would be the quantity supplied at a price of 80?
9. What would be the quantity demanded at a price of 30?
10 Questions
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QD = QS
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QD = QS
QS - QD 5 - 5
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QD = QS
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No Shortage No Surplus
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1. What is the equilibrium price? 50
2. What is the equilibrium quantity? 5
3. If the market price was 80, how many pizzas would be sold? 2
4. If the market price was 30, how many pizza would be sold? 3
5. If the market price was 80, would there be a shortage, surplus, or equilibrium? surplus
6. If the market price was 30, would there be a shortage, surplus, or equilibrium? shortage
7. What would be the quantity demanded at a price of 80? 2
8. What would be the quantity supplied at a price of 80? 8
9. What would be the quantity demanded at a price of 30? 7
10. What would be the quantity supplied at a price of 30? 3
10 Questions
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Tax Liability
Tax Incidence
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Tax Liability
Tax Incidence
Who is legally responsible to pay the tax to the
government
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Tax Liability
Tax Incidence
Who is legally responsible to pay the tax to the
government
Who actually pays the tax
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Just because I have the Tax Liability does not mean that I have the
Tax Incidence
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1. What is the equilibrium price before the tax?
2. What is the equilibrium quantity?
3. If the tax is 20 SAR, what will be the new price?
4. If the tax is 20 SAR, how many pizza would be sold?
5. What will be the total revenue with the new tax?
6. How much tax will the seller pay?
7. How much tax will the buyer pay?
8. How much will the total tax be?
9. How much did the seller earn after paying the tax?
10. Why isn’t the new price 70?
Pizza Tax Questions
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• Taxes discourage market activity • Value creation is reduced • Buyers and sellers share the burden • Buyers pay more, sellers receive less
Taxes