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Gov’t Policy Price Ceiling/Floor When It binds, to what effect Taxes/Subsidy

Gov’t Policy Price Ceiling/Floor When It binds, to what effect Taxes/Subsidy Demand/supply shifted, why, interpretation, new eq., incidence, relation to elasticity Welfare Meaning of Consumer/Producer Surplus, and efficient point

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Gov’t Policy Price Ceiling/Floor When It binds, to what effect Taxes/Subsidy

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  1. Gov’t Policy • Price Ceiling/Floor • When It binds, to what effect • Taxes/Subsidy • Demand/supply shifted, why, interpretation, new eq., incidence, relation to elasticity • Welfare • Meaning of Consumer/Producer Surplus, and efficient point • How to measure, different surpluses, interpretation on demand/supply curve • Welfare and Taxes/Subsidies • Measure welfare lost, DWL • DWL because of quantity not price, relation to interpretation of demand/supply curve as benefit/cost • Externalities – a market failure • Positive/negative • How and why shift curves to new equilibrium, how to fix with tax/subsidies • Market for pollution, tax/cap-n-trade/command control, optimal not zero • Public Goods/Common Resources • Definition of excludability/rivalry, type of goods • Failure of market (PG, CR) because of nonexcludability, gov’t fix

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