Chap06Supply,DemandandGovernmentPolicies(曼昆)(

Supply,DemandandGovernmentPoliciesChapter6Copyright©2001byHarcourt,Inc.Allrightsreserved.Requestsforpermissiontomakecopiesofanypartoftheworkshouldbemailedto:PermissionsDepartment,HarcourtCollegePublishers,6277SeaHarborDrive,Orlando,Florida32887-6777.Harcourt,Inc.itemsandderiveditemscopyright©2001byHarcourt,Inc.Supply,Demand,andGovernmentPoliciesInafree,unregulatedmarketsystem,marketforcesestablishequilibriumpricesandexchangequantities.Whileequilibriumconditionsmaybeefficient,itmaybetruethatnoteveryoneissatisfied.Oneoftherolesofeconomistsistousetheirtheoriestoassistinthedevelopmentofpolicies.Harcourt,Inc.itemsandderiveditemscopyright©2001byHarcourt,Inc.PriceControls...Areusuallyenactedwhenpolicymakersbelievethemarketpriceisunfairtobuyersorsellers.Resultingovernment-createdpriceceilingsandfloors.Harcourt,Inc.itemsandderiveditemscopyright©2001byHarcourt,Inc.PriceCeilings&PriceFloorsPriceCeilingAlegallyestablishedmaximumpriceatwhichagoodcanbesold.PriceFloorAlegallyestablishedminimumpriceatwhichagoodcanbesold.Harcourt,Inc.itemsandderiveditemscopyright©2001byHarcourt,Inc.PriceCeilingsTwooutcomesarepossiblewhenthegovernmentimposesapriceceiling:Thepriceceilingisnotbindingifsetabovetheequilibriumprice.Thepriceceilingisbindingifsetbelowtheequilibriumprice,leadingtoashortage.APriceCeilingThatIsNotBinding...$43QuantityofIce-CreamCones0PriceofIce-CreamConeDemandSupplyPriceceilingEquilibriumprice100EquilibriumquantityHarcourt,Inc.itemsandderiveditemscopyright©2001byHarcourt,Inc.APriceCeilingThatIsBinding...$3QuantityofIce-CreamCones0PriceofIce-CreamCone2DemandSupplyEquilibriumpricePriceceilingShortage125Quantitydemanded75QuantitysuppliedHarcourt,Inc.itemsandderiveditemscopyright©2001byHarcourt,Inc.Harcourt,Inc.itemsandderiveditemscopyright©2001byHarcourt,Inc.EffectsofPriceCeilingsAbindingpriceceilingcreates...shortagesbecauseQDQS.Example:Gasolineshortageofthe1970snonpricerationingExamples:Longlines,DiscriminationbysellersHarcourt,Inc.itemsandderiveditemscopyright©2001byHarcourt,Inc.LinesattheGasPumpIn1973OPECraisedthepriceofcrudeoilinworldmarkets.Becausecrudeoilisthemajorinputusedtomakegasoline,thehigheroilpricesreducedthesupplyofgasoline.Whatwasresponsibleforthelonggaslines?Economistsblamegovernmentregulationsthatlimitedthepriceoilcompaniescouldchargeforgasoline.Harcourt,Inc.itemsandderiveditemscopyright©2001byHarcourt,Inc.ThePriceCeilingonGasolineIsNotBinding...$4P1QuantityofGasoline0PriceofGasolineQ1DemandSupplyPriceceiling1.Initially,thepriceceilingisnotbinding...Harcourt,Inc.itemsandderiveditemscopyright©2001byHarcourt,Inc.ThePriceCeilingonGasolineIsBinding...P1QuantityofGasoline0PriceofGasolineQ1DemandS1PriceceilingS22.…butwhensupplyfalls...P23.…thepriceceilingbecomesbinding...4.…resultinginashortage.Harcourt,Inc.itemsandderiveditemscopyright©2001byHarcourt,Inc.RentControlRentcontrolsareceilingsplacedontherentsthatlandlordsmaychargetheirtenants.Thegoalofrentcontrolpolicyistohelpthepoorbymakinghousingmoreaffordable.Oneeconomistcalledrentcontrol“thebestwaytodestroyacity,otherthanbombing.”Harcourt,Inc.itemsandderiveditemscopyright©2001byHarcourt,Inc.RentControlintheShortRun...QuantityofApartments0RentalPriceofApartmentDemandSupplyControlledrentShortageSupplyanddemandforapartmentsarerelativelyinelasticHarcourt,Inc.itemsandderiveditemscopyright©2001byHarcourt,Inc.RentControlintheLongRun...QuantityofApartments0RentalPriceofApartmentDemandSupplyControlledrentShortageBecausethesupplyanddemandforapartmentsaremoreelastic...…rentcontrolcausesalargeshortageHarcourt,Inc.itemsandderiveditemscopyright©2001byHarcourt,Inc.PriceFloorsWhenthegovernmentimposesapricefloor,twooutcomesarepossible.Thepricefloorisnotbindingifsetbelowtheequilibriumprice.Thepricefloorisbindingifsetabovetheequilibriumprice,leadingtoasurplus.Harcourt,Inc.itemsandderiveditemscopyright©2001byHarcourt,Inc.APriceFloorThatIsNotBinding...$3QuantityofIce-CreamCones0PriceofIce-CreamCone100EquilibriumquantityEquilibriumpriceDemandSupplyPricefloor2APriceFloorThatIsBinding...$3QuantityofIce-CreamCones0PriceofIce-CreamConeEquilibriumpriceDemandSupplyPricefloor$4120Quantitysupplied80QuantitydemandedSurplusHarcourt,Inc.itemsandderiveditemscopyright©2001byHarcourt,Inc.Harcourt,Inc.itemsandderiveditemscopyright©2001byHarcourt,Inc.EffectsofaPriceFloorApricefloorpreventssupplyanddemandfrommovingtowardtheequilibriumpriceandquantity.Whenthemarketpricehitsthefloor,itcanfallnofurther,andthemarketpriceequalsthefloorprice.Harcourt,Inc.itemsandderiveditemscopyright©2001byHarcourt,Inc.EffectsofaPriceFloorAbindingpricefloorcauses...asurplusbecauseQSQD.nonpricerationingisanalternativemechanismforrationingthegood,usingdiscriminationcriteria.Examples:Theminimumwage,AgriculturalpricesupportsHarcourt,Inc.itemsandderiveditemscopyright©2001byHarcourt,Inc.TheMinimumWageAnimportantexampleofapriceflooristheminimumwage.Minimumwagelawsdictatethelowestpricepossibleforlaborthatanyemployermaypay.Harcourt,Inc.itemsandderiveditemscopyright©2001byHarcourt,Inc.TheMinimumWageQuanti