ECON101 Lecture Notes - Lecture 99: Price Ceiling, Price Floor, Midpoint Method

• School: University of Alberta
• Department: Economics
• Course: ECON101
• Professor: Alexander Gainer

Document Summary

Chapter 2 circular flow model & ppf model: key concepts, understanding ppf model, understanding opportunity cost everything (total) that you give up for something else. Nothing is free in life* usually costs time. Lawyer has an absolute advantage in cleaning, but not a comparative advantage in cleaning! Someone"s opportunity cost of cleaning a house is lower than the lawyer"s big per hour cleaning. Cross-price: substitute (pos)/ complement (neg: income elasticity: % change in income (usually increase) % change in quantity demanded of good: cross-price elasticity: % change in quantity demanded (x) Results in a surplus: binding price floor/ shortage: binding price ceiling: how taxes impact a market, wedge between what buyers pay and what sellers get (diagrams/graphs, elasticity effect on the tax: inelastic tax won"t hurt society, elastic. Chapter 8 taxes with consumer & producer surplus: key concepts, deadweight loss (drop in total surplus from market distortion ie. tax, elasticity impacts deadweight loss.