Government Policies

When analyzing government policies, supply and demand are the first and most useful tools of analysis. Price controls such as, price ceiling, price floor and tax incidence mentioned in this chapter show how price controls affect economy. Price ceiling is a legal maximum on the price at which a good can be sold and price floor is a legal minimum on the price at which a good can be sold. Evaluating price controls, this chapter explains why economists usually oppose price ceiling and price floor. According to one of the ten principles of economics, governments can sometimes improve market outcomes. There is a tax for improving arts and artistic circumstance when we buy a ticket for a concert. How the burden of a tax is divided is different from other products because elasticity of music concerts depends on the content of the concert. But demand of classical music concert is mostly elastic and supply of classical music concert is inelastic. Therefore, sellers might bear most of the burden of the tax to help other artistic activity but the division of the tax burden between sellers and buyers does not depend on whether government levies the tax on sellers, levies the tax on buyers or divides the tax equally between two groups. And also the tax for a ticket to improve arts and artistic circumstance is also used as art subsidies. So subsidies are making classical music more accessible to people. The object of tax and subsidies is to make classical music more accessible to people. Considering those concepts, imposing a tax in this case is necessarily important to improve market outcomes in the classical music field. It is in the feed back condition between tax and subsidies in arts. The principle, governments can sometimes improve market outcomes, is fit in classical music field.

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