100% satisfaction guarantee Immediately available after payment Both online and in PDF No strings attached
logo-home
Summary Cambridge International AS & A Level Eco, ISBN: 9781107679511 Unit 3 - Government intervention in the price system (9708) $14.63   Add to cart

Summary

Summary Cambridge International AS & A Level Eco, ISBN: 9781107679511 Unit 3 - Government intervention in the price system (9708)

 26 views  0 purchase
  • Course
  • Institution
  • Book

These documents include the whole summary for Topic 3:Government microeconomic intervention of Economics (CIE). The summary includes the most important key terms and concepts needed for sitting the exam. Also, there is a big range of brief, detailed information that will help you understand the top...

[Show more]

Preview 2 out of 9  pages

  • No
  • Chapter 3
  • January 19, 2023
  • 9
  • 2022/2023
  • Summary
avatar-seller
Economics notes




Topic 3
Government microeconomic intervention

How do the governments intervene?

Governments intervene in markets and the justification is the market failure.

➔ Regulations
◆ Max price
◆ Min price
➔ Taxes
◆ Direct
◆ Indirect
● Ad valorem
● Specific taxes
➔ Subsidies
➔ Government provision
◆ Transfer payments
◆ Direct provision of goods + services
◆ Nationalisation + Privatisation

Regulations

➢ Maximum price : set by govt so that a good doesn't become too expensive to
produce/consume.
○ Below the free
market price
■ Prevent being
ineffective




1

, ○ As price is lower, supply decreases
■ Suppliers - less willing to produce as much
■ Consumers now demand more at the price level
■ Producers receive less profit
➢ Minimum price: set by the govt so that a good never falls
below a certain price.
○ Also called Price floors
○ Price increases
■ Causes oversupply
● Govt will have to buy surplus
○ Causes: deadweight welfare loss
■ Occurs when there is difference
between the price the marginal
demander is willing to pay + the
equilibrium price
■ The loss of consumer + producer
surplus

Taxes

➔ Direct :
◆ Paid directly to the govt (cannot be
avoided)
➔ Indirect :
◆ Imposed by the govt to increase
production costs for producers
◆ Producers supply less
● Increases market price
● Demand contracts
◆ Specific taxes: tax per unit
● Demand is perfectly inelastic
● Supply perfectly elastic
● Shaded area : size of the tax paid by the consumer




2

The benefits of buying summaries with Stuvia:

Guaranteed quality through customer reviews

Guaranteed quality through customer reviews

Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.

Quick and easy check-out

Quick and easy check-out

You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.

Focus on what matters

Focus on what matters

Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!

Frequently asked questions

What do I get when I buy this document?

You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.

Satisfaction guarantee: how does it work?

Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.

Who am I buying these notes from?

Stuvia is a marketplace, so you are not buying this document from us, but from seller maradelrosariopadillasnchez. Stuvia facilitates payment to the seller.

Will I be stuck with a subscription?

No, you only buy these notes for $14.63. You're not tied to anything after your purchase.

Can Stuvia be trusted?

4.6 stars on Google & Trustpilot (+1000 reviews)

64438 documents were sold in the last 30 days

Founded in 2010, the go-to place to buy study notes for 14 years now

Start selling
$14.63
  • (0)
  Add to cart