Chapter 6

Chapter 6 starts off with how government policies on price can affect on market outcomes. Government policies can establish price ceilings and price floors, price maximums and price minimums respectively. If the equilibrium prices do not cross the boundaries everything is fine but once they do shortages and surpluses can occur. Surpluses happen with price ceilings and shortages happen with price floors. Next the book tackles taxes. When a good or service is taxed  the tax does not fall on the buyers or the seller, it falls on both. This is called the burden of tax and the way it is  spread is called the tax incidence. The way the tax is divided depends on how the supply and demand graphs look and their elasticity. I would give this chapter a 1 out of 3. I feel price floors and ceilings are easy to understand and so are taxes and their divisions among the buyers and sellers. However I do no exactly know how to calculate the actual division of the tax.