Video Recap
subsidies
Is used in many parts of the market specially in fossil fuels
The US government give money to the fossil fuels companies (about 4.6 dollars per year)
A subsidy will shift the supply curve to the right and lower the equilibrium in a market
drawback of subsidies is that there may be a shortage in supply but with heigh demand
minimum price
minimum price is a protection against explotation example minimum wage
minimum price increases demand and increase supply so equilibruim will increase
the government will end up benifiting from this
there are many drawbacks: higher prices for consumers
Maximum price
is when the gov adds a price limit on a good or service
prevent price of nessecities of going to high to make it possible for everyone to buy them
they can also monopoly
some real life examples: train tickets (monopoly power)- for food this intervention keeps the food affordable
consumers benefit from this type of intervention prevents exploitation, this increases the QD
drawbacks: it pushes ppl towards the black market
Minimum wage
sup
minimum wage should provide enough income to live (food ) this should protect them from exploitations, however, this causes inflation over time
When there is an increase in a minimum wage, more people are willing to work for a certain company, increasing the production rate exponentially.
Direct Provision
Indirect taxation
More schools were built so the quantity increased. The goal is to give everyone the possibility of having a good education.
For the equilibrium, the demand increases and the price goes down. The demand makes a right ward shift.
Direct provision is a means of meeting the basic needs of food, education and shelter for citizens
Both government and population can benefit from this government intervention. The government will have more educated people in the country and for the people to become smarter and to learn things.
taxes causes increaes in price decrease in demand and decrease in supply
the taxes cahnges the price of the whole the custmer does not realize that there is a tax impos
Indirect taxation is a type of tax where the incidence and impact of taxation does not fall on the same entity. There are 2 types of indirect taxes, ad valorem and specific
in Dubai a form would be taxes on tabaco
this type beefits everyone
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the supply and demand decreases so equilibruim decreases
however demand depends on lecticity
leftward shift of the supply curve