Ch. 6 Government Intervention Flashcards
Statutory Burden
Burden of being assigned by the government to send a tax payment
Economic Burden
Burden created by the change in after-tax prices faced by buyers and sellers
Tax Incidence
The division of the economic burden of a tax between buyers and sellers
Tax on Buyers
Shifts curve to the left, declines quantity sold, increases price paid and decreases price recieved
Subsidy
A payment made by the government to those who make a specific choice
Price Ceiling
A maximum price that sellers can legally charge
Price Floor
A minimum price that sellers can legally charge
Binding Price Ceiling
A price ceiling that prevents the market from reaching the market equilibrium price; the highest price sellers can charge is below equilibrium price
Price Gouging
Raising the price above what is considered fair
Usury Laws
Prevent payday loan companies from charging excessively high rates
Taxi Fares
Travel prices set by local government
Binding Price Floor
A price floor that prevents the market from reaching the equilibrium price; lowest price that sellers can charge is above equilibrium
Quantity Regulations
A minimum or maximum quantity that can be sold
Mandate
A requirement to buy or sell a minimum amount of a good
Quota
A limit on the maximum quantity of a good that can be bought or sold; raise prices
