Government Policies, Price Controls, and Taxes — Effects on Markets Explained | Chapter 6 of Principles of Microeconomics
Government Policies, Price Controls, and Taxes — Effects on Markets Explained | Chapter 6 of Principles of Microeconomics How do government policies shape the way markets function? Chapter 6 of Principles of Microeconomics explores how interventions like price controls and taxes influence market outcomes, sometimes with unintended consequences. Understanding these policies is crucial for evaluating their impact on buyers, sellers, and overall market efficiency. 🎥 Watch the full chapter summary below and subscribe to Last Minute Lecture for more textbook breakdowns and practical study guides! Price Controls: Ceilings and Floors Price controls are legal restrictions on how high or low a market price can go. A price ceiling sets a maximum legal price (like rent control), while a price floor sets a minimum (such as the minimum wage). Binding Price Ceiling: Set below equilibrium; causes shortages and inefficient rationing. Non-binding Price Ceiling: Ab...