Transcript Chapter 6

Midterm Evaluation
• What can you do to help yourself?

Come to class, pay attention, read the
book, come see me for help, and study
more
• What can I do to help you?

Study session before exams

More problems in class (group work)

Slow down

Post notes on the web as well as slides
Chapter 6
Market Efficiency
and Government
Intervention
Theory in Action…
• http://news.yahoo.com/s/ap/20070215/ap_on_re_us/smokers__
money_1;_ylt=AotIC78uRu8XEm7DcrPJvKGQ1EMF
Drop in Smoking Means Less Tax Revenue Applied Topics:
Changes in versus changes in quantity demanded and demand,
price elasticity of demand
• The article examines decreasing tobacco tax revenues.
• Questions:
• In the short run, does the demand for cigarettes appear to be
price elastic or inelastic? Explain.
• The article notes that, over the long run, federal tax revenues
from tobacco products have decreased and despite increases in
tobacco taxes in most states, these tax revenues have either
decreased or are expected to decrease at the state level.
Explain, using the supply and demand model, why this is
happening.
Pros and Cons of the Minimum Wage
• Pro:

The minimum wage helps pull some workers out
of poverty.
• Cons:

The minimum wage could lead to:
• Reduced hours for workers
• Poor working conditions
• Less worker training

It mainly effects teenagers, not families living
in poverty.