EC120 Chapter Notes - Chapter 6: Demand Curve, Tax Incidence, Profit Margin
![EC120 Full Course Notes](https://new-docs-thumbs.oneclass.com/doc_thumbnails/list_view/2255876-class-notes-ca-wlu-ec-120-lecture16.jpg)
30
EC120 Full Course Notes
Verified Note
30 documents
Document Summary
Scientists: develop theories to explain the world around them. Policy advisors: use their theories to help change the world for the better. Price ceiling: a legal maximum on the price at which a good can be sold. Price floor: a legal minimum on the price at which a good can be sold. If the price ceiling is above the equilibrium price then the ceiling is not binding. Gasoline price ceiling: with a ceiling on price that is binding it results in long lines for gas especially when supply is rationed by the suppliers due to the low capital. If the floor is not binding then the equilibrium stays the same and is the going rate. If the floor is binding then suppliers will not be able to sell all of their products because the quantity supplied exceeds the quantity demanded.