Slides for chapter 6 supply demand and gvt policy 1 prev version
1. Text: Principles of Macroeconomics, N. Gregory Mankiw, Sixth Edition.
Instructor: Sue Guzek, Kansas State University Salina
Music: We Gonna Make You… By Troy “Trombone Shorty” Andrews and Orleans
Avenue – Orleans and Claiborne
1
10. 10
Sellers appeal to personal biases of buyers
and those with more connections are more
successful.
This intervention is also seen as undesirable
by economists
11. 11
Q supplied =
Workers
When production price is
forced up by higher price of
labor, Quantity demanded
is less and
Labor Surplus results in
unemployment
Price
12. 12
Price Buyers Pay $3.30
Price without tax $3.00
Price sellers receive $2.80
100
Tax on Sellers
13. 13
Price Buyers Pay $3.30
Price without tax $3.00
Price sellers receive $2.80
100
Tax on Buyers
14. 14
Price Buyers Pay $3.30
Price without tax $3.00
Price sellers receive $2.80
100
Taxes levied on sellers and
taxes on Buyers are
equivalent
AND reduce the size of the
market
The only difference is who actually sends the money to the
government!
15. 15
A tax burden falls more heavily on the
side of the market which is less elastic
When supply is more elastic than
demand the tax burden falls more on
the consumers
Than on producers
D
16. 16
A tax burden falls more heavily on the
side of the market which is less elastic
When demand is more elastic than
supply the tax burden falls more on
the Producers
Than on Consumers
