Tinkering with Markets
Up to now we have been examining the way markets operate when they are left to their own devices. However, markets are rarely left to their own devices. External measures are often introduced into a market—often by the government, sometimes by business. These interventions can affect the price of a product or service, the quantity demanded, and the behavior of producers and consumers. The rest of this chapter examines some of these measures—specifically, sales taxes, rent controls, and the minimum wage—and their effect on supply and demand.
Interventions in the market consist of steps by the government (price ...