tailieunhanh - Lecture Economics of social issues - Chapter 3: Government control of prices in mixed systems: What are the actual outcomes?

Governments within mixed economies have regularly supplanted the market determination of prices with legally instituted prices. In some cases, governments dictate that goods and services may not be sold for more than a specific price—price ceilings. In other cases, just the opposite happens and governments set minimum acceptable prices price floors. | Chapter 3 Government Control of Prices in Mixed Systems: What Are the Actual Outcomes? Copyright © 2010 by the McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 3- Price Controls Price Ceilings Price Floors 3- S S D D A B Rent Control Rent per unit $ Quantity (thousands of units per year) 500 400 8 10 11 600 3- S S Rent Control Rent per unit $ Quantity (thousands of units per year) 500 10 11 D D 600 800 S1 S1 525 13 D1 D1 Click 1: D1 Click 2: S1 Minimum Wages - Market Demand for Labor Wage rate ($) D D .50 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 (Quantity (thousands of hours per week) 3- The Demand for Labor by One Employer (1) (2) (3) (4) (5) Units of Labor Total Production Marginal Product Marginal Revenue Marginal Revenue Product MRP = (3) x (4) 0 0 1 5 5 $.50 $ 2 25 20 $.50 3 50 25 $.50 4 70 20 $.50 5 80 10 $.50 6 85 5 $.50 7 86 1 $.50 .50 3- 3- The Demand for Labor by One Employer Quantity of Labor 1 2 3 4 5 6 7 .50 3- Market Supply of Labor Wage rate ($) S S Substitution Effect Income Effect .50 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Quantity (thousands of hours per week) Click 1: textbox 3- Effects of the Minimum Wage Quantity (thousands of hours per week) Wage rate ($) D D S S 9 Click 1: Add minimum wage at $ 3- Alternative Analysis of the Minimum Wage Quantity (thousands of hours per week) Wage rate ($) D D S S 9 | Chapter 3 Government Control of Prices in Mixed Systems: What Are the Actual Outcomes? Copyright © 2010 by the McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 3- Price Controls Price Ceilings Price Floors 3- S S D D A B Rent Control Rent per unit $ Quantity (thousands of units per year) 500 400 8 10 11 600 3- S S Rent Control Rent per unit $ Quantity (thousands of units per year) 500 10 11 D D 600 800 S1 S1 525 13 D1 D1 Click 1: D1 Click 2: S1 Minimum Wages - Market Demand for Labor Wage rate ($) D D .50 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 (Quantity (thousands of hours per week) 3- The Demand for Labor by One Employer (1) (2) (3) (4) (5) Units of Labor Total Production Marginal Product Marginal Revenue Marginal Revenue Product MRP = (3) x (4) 0 0 1 5 5 $.50 $ 2 25 20 $.50 3 50 25 $.50 4 70 20 $.50 5 80 10 $.50 6 85 5 $.50 7 86 1 $.50 .50 3- 3- The Demand for Labor by One Employer Quantity of Labor 1 2 3 4 5 6 7 .50 3- Market Supply of Labor Wage rate ($) S S Substitution Effect Income Effect .50 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Quantity (thousands of hours per week) Click 1: textbox 3- Effects of the Minimum Wage Quantity (thousands of hours per week) Wage rate ($) D D S S 9 Click 1: Add minimum wage at $ 3- Alternative Analysis of the Minimum Wage Quantity (thousands of hours per week) Wage rate ($) D D S S 9 .