Government Action In Markets Flashcards
(7 cards)
1
Q
What is a price ceiling
A
A government regulation of the max price that may be legally charged.
2
Q
What is a rent ceiling
A
A price ceiling in the market for rental housing.
3
Q
What is the difference between a binding and non binding rent ceiling?
A
A binding rent ceiling is when it is less than the equilibrium rent. A non binding rent ceiling is when it is greater than the equilibrium rent.
4
Q
What is tax incidence
A
The division of the burden of a tax between the buyer and the seller
5
Q
When an item is taxed and the price rises by the full amount who pays the tax?
A
The buyer
6
Q
When an item is taxed and the price rises by a lesser amount, who pays the tax?
A
The buyer and the seller
7
Q
When an item is taxed and the price doesn’t rise, who pays the tax?
A
The seller
