Supply, demand and government policies

Figure 1 A Market with a Price Ceiling (1)
(a) A price ceiling that is not binding
Quantity of
ice cream
cornets
0
Price of
ice cream
cornet
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Figure 1 A Market with a Price Ceiling (2)
(b) A price ceiling that is binding
Quantity of
ice cream
cornets
0
Price of
ice cream
cornet
Copyright © 2011 Cengage Learning

Figure 2 Rent Control in the Short Run and in the Long Run (1)
(a) Rent control in the short run
(supply and demand are inelastic)
Quantity of
apartments
0
Rental
price of
apartment
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Figure 2 Rent Control in the Short Run and in the Long Run (2)
(b) Rent control in the long run
(supply and demand are elastic)
0
Rental
price of
housing unit
Quantity of
housing units
Copyright © 2011 Cengage Learning

Figure 3 A Market with a Price Floor (1)
(a) A Price Floor That Is Not Binding
Quantity of
ice cream
cornets
0
Price of
ice cream
cornet
Copyright © 2011 Cengage Learning

Figure 3 A Market with a Price Floor (2)
(b) A price floor that is binding
Quantity of
ice cream
cornets
0
Price of
ice cream
cornet
Copyright © 2011 Cengage Learning

Figure 4 How the Minimum Wage Affects the Labour Market (1)
Quantity of
labour
Wage
0
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Figure 4 How the Minimum Wage Affects the Labour Market (2)
Quantity of
labour
Wage
0
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Figure 4 How the Minimum Wage Affects the Labour Market (3)
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Figure 4 How the Minimum Wage Affects the Labour Market (4)
Copyright © 2011 Cengage Learning

Figure 5 A Tax on Sellers
Quantity of
ice cream cornets
0
Price of
ice cream
cornet
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Figure 6 A Payroll Tax
Quantity
of labour
0
Wage
Copyright © 2011 Cengage Learning

Figure 7 How the Burden of a Tax Is Divided (1)
Quantity
0
Price
(a) Elastic supply, inelastic demand
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Figure 7 How the Burden of a Tax Is Divided (2)
Quantity
0
Price
(b) Inelastic supply, elastic demand
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