Price Controls, Taxes, and Subsidies

INTRODUCTION

Today we will learn about several concepts. We will explore how government intervention such as the use of price controls, subsidies, and excise taxes affect markets. You should have read the text chapter identified below in the homework section and watched the related videos. We will start class today with you working cooperatively with a partner to find a solution to the "Problem of the Day" and then there will be a lecture on our next topic. This page contains all the information you need for today's class: homework, the problem of the day, helpful resources (videos, podcasts, etc.) and an explanation of the activities we will do in class. Use the table of contents on the right to help you navigate.

HOMEWORK

Read Mankiw (Chapter 6) and watch the following videos.

Khan Academy Videos

• Rent control and dead weight loss

• Minimum wage and price floors

ASSESSMENTS AND ACTIVITIES

Problem of the Day: You will work cooperatively with your partner to construct a response to the following prompt.

1. Define allocative efficiency.

2. Use a supply and demand diagram to explain why an unregulated competitive market is allocatively efficient.

3. Use a new supply and demand diagram to explain how an unregulated competitive market rations goods efficiently.

Lecture

• Price Controls, Subsidies, and Excise Taxes

ENRICHMENT

Related readings

• Boston’s plague of cheap parking

• There Is No Invisible Hand

• Sleight of the Invisible Hand

• Harberger's triangle = Dead Weight Loss

• They Clapped: Can Price-Gouging Laws Prohibit Scarcity?

• Boettke on Katrina and the Economics of Disaster

• Michael Munger on Exchange, Exploitation and Euvoluntary Transactions

• Bubbles

• Efficient Markets Theory

• Stock Market

• Efficiency

• Information and Prices

• Capital Gains Taxes

• Corporate Income Tax

• Efficient Capital Markets

• Insider Trading

• Market for Corporate Control

• Stock Markets

• Intellectual Property

• The Internet and the Role of Information

• Privatization

• Cost-benefit Analysis

• The Economic Cost of Gun Violence

• The Value of a Human Life

  • Minimum Wage in Europe Offers Ammunition in U.S. Debate

• Podcasts

• Michael Munger on John Locke, Prices, and Hurricane Sandy

• If you plan to take college economics or just want more depth, watch these:

Khan Academy Videos

• Taxation and dead weight loss

• Percentage tax on hamburgers

• Taxes and perfectly inelastic goods

• Taxes and perfectly elastic goods