After reading this chapter, students should be able to:

• Describe the effects of a tax or subsidy in a competitive market.
• Explain what determines who bears the burden of a tax and the difference between the statutory and economic incidence of the tax.
• Compare the results of price floors, price supports, production quotas, and voluntary price programs.
• Show the effects of a price ceiling.
• Define domestic aggregate surplus and determine the effects of import tariff's and quotas.