Question:
How can Market Distortions [Disequilibrium] Happen from Government Intervention? Use an Example with Income Tax, Fixing the Price, and Subsidies
Author: eric_galvaoAnswer:
-Income Tax may be a Disincentive to Work Hard - Increasing your Earning means more Tax has to be Paid -Fixing the Price can also lead to Price Signals being Mucked up. Minimum Prices giving Suppliers the Ability to Mass Produce and Flood the Market -Subsides may make Firms less Efficient as they become more Reliant
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