08 Flashcards
(24 cards)
Partial Market Equilibrium
Equilibrium for one good where
S (p) = D(p)
Why “partial”: Ignores other markets.
Stability:
p<p∗ : Shortage → price rises
p>p∗: Surplus → price falls
mantigi:
- p < p*
(Fiyat düşük → Kıtlık / Shortage)
Tüketiciler için fiyat ucuz → Demand artar
Üreticiler için fiyat düşük → Supply
azalır
Demand >Supply → Kıtlık (shortage) oluşur
Sonuç: Ürün yetmez → Rekabet → Fiyat yükselir - p > p* (Fiyat yüksek → Fazlalık / Surplus)
Fiyat pahalı → Demand azalır
Üreticiler için cazip → Supply artar
Arz > Talep → Fazlalık (surplus) oluşur
Sonuç: Satılamayan ürünler → Stoklar birikir → Fiyat düşer
How does a supply shock differ from a demand shock?
Supply shock affects producer costs (shifts S(p) ); demand shock affects buyer preferences ( shifts D(p) ).
How do we find the new equilibrium prices after tax?
pD = pS+ t
→Tüketici fiyatı = üretici fiyatı + vergi
D(pD) = S(pS)
→ Talep (tüketici fiyatına göre) = Arz (üretici fiyatına göre)
What happens to prices when a per-unit tax t is imposed?
Consumers pay pD, producers receive pS = pD -t
The equation pD−pS = t
captures that the difference between
what consumers pay and what producers get is = the tax.
Does it matter whether a tax is levied on buyers or sellers for the final economic outcome?
No. The equilibrium prices pD consumer price and pS producer price (and tax burden) are identical in both cases. The burden depends on supply/demand elasticities, not legal assignment.
What does it mean for supply to be perfectly elastic?
The supplier is only willing to produce at one price; any lower price leads to zero supply.
What happens if a tax is imposed and supply is perfectly elastic?
The entire tax is passed on to consumers via a higher price.
Elastic vs Inelastic supply?
Elastic = Esnek = Miktar esnek (fiyat sabit)
yatay çizgi
Inelastic = İnatçı = Miktar sabit (fiyat esnek)
dikey çizgi
If supply is perfectly elastic, the tax is..
fully passed on to consumers.
If supply is nearly perfectly elastic, the tax has little effect on the price
producers receive.
If supply is perfectly inelastic, the tax is..
not passed on to consumers.
If supply is nearly perfectly inelastic, only a small portion of the tax is
passed on to consumers.
Who pays the tax..
Depends on elasticity
Elastic supply → Consumers pay most of tax
Inelastic demand → Producers pay most
How are demand and supply elasticities approximated around equilibrium (p, q) when analyzing a tax?
Demand Elasticity (ε_D):
ε_D ≈ (-Δq/q) / ((pt_D - p)/p*)
Supply Elasticity (ε_S):
ε_S ≈ (Δq/q) / ((p - pt_S)/p*)
Key:
ε D: % change in quantity demanded per % price increase paid by consumers (pD-p*)
εS: % change in quantity supplied per % price decrease received by producers (P*-pS)
(pD-p) and (p-pS) ?
(pD-p*) : How much more consumers are paying after the tax.
pD: Price consumers pay after tax
p*: Original (pre-tax) equilibrium price
This is the extra burden (cost) that consumers bear because of the tax.
(p*-pS) :How much less producers are receiving after the tax
pS: Price producers receive after tax
p*: Again, the original price before tax
This is the reduction in revenue per unit that producers suffer.
How is the tax burden (t) divided between consumers (pD-p) and producers (p-pS) based on elasticities?
(pt_D - p) / (p - pt_S) ≈ ε_S / - ε_D
Key:
Consumers pay more if ∣εS≫∣εD∣
(elastic supply, inelastic demand).
Producers pay more if
∣ε D∣≫ε S
(elastic demand, inelastic supply).
What is deadweight loss (DWL) from taxation?
The lost economic welfare (reduction in total surplus = CS + PS + GR) caused by a tax, because it discourages mutually beneficial trades (quantity traded falls below equilibrium).
Arises because the tax distorts incentives for buyers/sellers.
How is DWL shown on a supply-demand graph?
The triangle between:
Original equilibrium (q*)
Post-tax quantity (qt)
Why does taxation not create deadweight loss when demand or supply is perfectly inelastic?
Because the quantity traded remains unchanged. No mutually beneficial trades are lost, so no efficiency is lost.
Policymakers sometimes consider very direct interventions in markets…
Price ceilings: set the maximum price that suppliers are allowed to
charge. (e.g. rent control)
Price floors: define a minimum price below which the market price
may not fall. (e.g. minimum wage, minimum prices)
What are the effects of a price floor?
Consumers are worse off due to higher prices, not all suppliers may be able to sell, and inefficiencies arise because market competition breaks down.
Price floor = Yapay fiyat artışı → Fazlalık + verimsizlik + tüketici kaybı
Why might total welfare not be measured just by summing consumer and producer surplus?
Because in policies like minimum wage, distribution matters—some workers gain while others lose, so a decrease in total surplus might still be considered acceptable due to equity concerns.
Bu iki ifade, fiyat kontrolü politikalarının — yani taban fiyat (floor) ve tavan fiyat (ceiling) — piyasa dengesini nasıl etkilediğini anlatıyor.
✅ Floor (Taban Fiyat):
p̄ > p* → Surplus (Arz Fazlası)
Mantık:
Devlet der ki: “Bu ürün en az p̄ fiyata satılacak.”
Ama serbest piyasa fiyatı p* daha düşüktü.
Yeni yüksek fiyatta:
Tüketici daha az almak ister (talep azalır)
Üretici daha çok satmak ister (arz artar)
Arz > Talep → fazlalık / surplus
✅ ✅ Ceiling (Tavan Fiyat):
p̄ < p* → Shortage (Kıtlık)
Mantık:
Devlet der ki: “Bu ürün en fazla p̄ fiyata satılabilir.”
Ama serbest piyasa fiyatı p* daha yüksekti.
Yeni düşük fiyatta:
Tüketici daha fazla almak ister (talep artar)
Üretici daha az üretmek ister (arz azalır)
Talep > Arz → kıtlık / shortage
What happens when a price floor is set above the market price?
Surplus occurs — supply exceeds demand.
What happens when a price ceiling is set below the market price?
Shortage occurs — demand exceeds supply.
