Microeconomics

Opening
Prayer

Price
Supply
Demand
Tax
Wedge
(Size of
the Tax)
Price paid by buyers
Price received by sellers
Price with no tax
QTax QNo Tax
Quantity
Taxes

Price
Supply
Demand
Tax
Wedge
(Size of
the Tax)
Price with no tax
Quantity
Taxes

Price
Supply
Demand
Tax
Wedge
(Size of
the Tax)
Price with no tax
Quantity
Taxes

More Elastic
Pay less of the tax
Less Elastic
Pay more of the tax

Elasticity
How easy is it to escape?

Price
Supply
Demand
Subsidy
Wedge
(Size of
the
Subsidy)
Price
QSubdidy
QNo Subsidy Quantity
Subsidies

Price
Supply
Demand
Tax
Wedge
Price paid
by buyers
Price received
by sellers
Price with
no tax
QTax QNo Tax
Quantity

Price Controls
Ceilings
Floors

Price
Supply
Demand
Market Price
Quantity
Price Controls
QD = Qs
Qm
Maximum
Ceiling
Controlled Price
Qd
Qs
Shortage

Price
Supply
Demand
Market Price
Quantity
Price Controls
QD = Qs
Qm
Minimum
Floor
Controlled Price
Qd Qs
Surplus

Wage
Supply
Demand
$12
Quantity
Wage Controls
150
Minimum
Floor
Minimum Wage $20
100 200
Raise Fired Not Hired

“A living wage is an antidepressant. It is a sleep aid. A
diet. A stress reliever. It is a contraceptive,
preventing teenage pregnancy. It prevents premature
death. It shields children from neglect.”
February 2, 2019
“Dollars at the Margin,” by Matthew Desmond,
Prof. of Sociology, Princeton University.

“We
fi
nd robust evidence that minimum wage hikes
increase property crime arrests among teenagers and
young adults ages 16-to-24, a population for whom
minimum wages are likely to bind, generating criminal
externality costs of $2.4 billion a year.”
“Do Minimum Wage Increases Reduce Crime?” by Zachary S. Fone, Joseph J. Sabia, and Resul
Cesur (NBER Working Paper, March 2019)

Amazon disclosed in the report that it received a record
850,000 work applications for hourly jobs in the US in
October 2018 after announcing it would raise its minimum
wage to $15 an hour starting Nov. 1.