Who gets the revenue in the case of a price floor

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Reference no: EM131402213

1. In which case would the shortage resulting from a price ceiling be greater: when supply is inelastic or elastic? Explain your answer.

2. Demonstrate how a price floor is like a tax on consumers and a subsidy to suppliers. Label the following: tax on consumers, transfer of surplus to suppliers, and welfare loss.

a. Who gets the revenue in the case of a tax?

b. Who gets the revenue in the case of a price floor?

Reference no: EM131402213

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