Taxes, Price Controls, and Quantity Regulations

These flashcards cover key terms and concepts related to taxes, price controls, and quantity regulations as discussed in Chapter 6.

Statutory burden

The burden of being assigned by the government to send a tax payment.

Economic burden

The burden created by the change in the after-tax prices faced by buyers and sellers.

Tax incidence

The division of the economic burden of a tax between buyers and sellers.

Price ceiling

A maximum price that sellers can charge, set by the government.

Binding price ceiling

A price ceiling that prevents the market from reaching the market equilibrium price, set below the equilibrium price.

Price floor

A minimum price that sellers can charge, set by the government.

Binding price floor

A price floor that prevents the market from reaching the market equilibrium price, set above the equilibrium price.

Quota

A limit on the maximum quantity of a good that can be bought or sold.

Mandate

A requirement to buy or sell a minimum amount of a good.

Subsidy

A payment made by the government to those who make a specific choice, effectively lowering the price for buyers.

Elasticity

A measure of how responsive the quantity demanded or supplied is to changes in price.

Binding mandate

A mandate that increases the quantity bought or sold to the mandated amount, set above the equilibrium quantity.

Shortage

A situation in which demand for a good exceeds its supply at a given price.

Surplus

A situation in which supply of a good exceeds its demand at a given price.

Soda tax

A tax imposed on sugar-sweetened beverages aimed at reducing consumption.

Minimum wage

A price floor that sets the lowest legal wage that can be paid to workers.

Health risks

Potential negative effects on health, such as diabetes and heart disease, associated with certain products like sugary drinks.

Market equilibrium

The point at which supply equals demand for a good or service.

Demand curve

A graph showing the relationship between the price of a good and the quantity demanded.

Supply curve

A graph showing the relationship between the price of a good and the quantity supplied.

Market outcome

The result of the interactions of supply and demand in a market.