#4 * Demand curve to RIGHT ---increase * Demand curve to LEFT --- Decrese * Higher prices means greater quantity supplied * Suppyly curve : down up * Demand curve : up low * Surplus: quantity supplied is greater than demanded * Shortage : demanded is greater than supplied

#5 * Elastic: when demand for a good responds Subtantially to changes in the price. * Inelastic: respond only Slightly to price changes. * Price elasticity of demand : [QL-Qs]/Qi ／[PL-Ps]/Qi = %Q/%P * If the number is less than 1 its inelastic. * Total Revenue : Price X Quantity

Is it possible to have inelastic and elastic properties along a single demand curve?
Answer: Yes
If technology increases the supply, are farmers better off?
Answer: This depends on the elasticity of the curves.

#6 Price ceiling : MAX price Price floor: MiNI price No bonding : ceiling price is higher than Equal price Bonding: Equal price is higher than ceiling price If FLOOR too high---bond-above equil/ cause suplus
Non-bond------below equl/ aperture at quil If ceiling too high--- no bond/ when it bonds,cause shortage
Tax burden: if the demand curve is more INELASTIC than the supply,it will fall on consumer
PS-producer surplus : amount a seller sell a good – seller’s cost
CS-consumer surplus: a buyer’swillingness to pay – buyer actually pays

#7
Consumer surplus: above the market price /below the demand
Producer surplus: below the price /above supply curve
#8

Resources is efficient if : total surplus is MAX
The tax : the quantity of the good falls ANYWAY.
Deadweight loss is a consequence of a tax of good BC:
Induce buys to consume less,produce less of good.

#10 Externality: cause markets to be inefficient THUS fail to Max total surplus. Total surplus= consumer surplus+ producer surplus “Invisible hand”—maximize the total surplus Adverse impact : negative externality [吨货多需求少]– too larger quantity than socially desirable. Ex: pollution/cigarette smoke Beneficial impact: positive externality- --smaller quantity than socially desirable Ex: education /immunization To achieve the socially optimum: • the government can internalize an externality by imposing a tax on the producer to reduce the equilibrium quantity to the socially desirable quantity. ------------------------------the way to solve the problem: Coase Theorem: Is a proposition that if private parties can bargain WITHOUT cost over the allocation of resources. Government: 1. Command and control 2. Corrective taxes [ determine the level of pollution ] 3. Tradable permits [ determine the price of pollution ]

#11 FREE GOOD = PUBILIC GOOD: challenges that do not have prices. No proper amounts Excludability: preventing from using it Rivalry: diminishes other ppl’s use 4 goods : * private[E,R] --- ice cream/clothing/toll roads * public[ neither E nor R ]--- national defense/noncom nontoll roads * common resources[R] ---fish in the ocean/ environment /nontoll roads * natural monopoly [E] --- cable TV / fire protection FREE-RIDER: a person who receives the benefit of a good but avoids paying for it [ public radio ]

#12 Design of the tax system : see how the gov raises and spends money along with the difficulty of making a tax system both efficient and equitable. Taxes: * reduce the quantity sold in a market * burden depends on the relative elasticities of supply and demand[ D- inelastcity- tax on people ] * deadweight loss Social security is the FIRST large expenses for gov A budget surplus : receipts are greater than gov spending. A LUMP-SUM tax : same amount for every person/ the most efficient/but unfair. Proportional tax: ALL PEOPLE PAY SAME % OF INCOME Regressive tax : HIGH—PAY SMALLER LOW---PAY BIGGER % Progressive tax : high ---