Price Control In New York City

A price ceiling is a government-levied maximum rate for a product or good. When a price ceiling inflicted by the government is more than retail equilibrium price, the price ceiling has no effect on the market or economy. This is because it does not obstruct supply, nor does it boost the demand. A different effect transpires if the government imposes a price ceiling below the market’s equilibrium rate. The suppliers will no longer be capable of charging the price that the market mandates, but they are required to meet the maximum price determined by the government’s price ceiling. When the demand rises beyond the capability to supply, shortages ensue. This leads to rationing of the product, causing some consumers to experience longer lines to obtain the product. In a worse case, there would be no products available for the consumer to buy.

The motivation and goals behind the institution of price ceilings may be well intentioned, but the actual implementation can be problematic. If suppliers are not able to charge a high enough price for their goods to make it profitable for them, they may decide that it is not worth the cost to obtain the goods in the first place.

However, when the equilibrium price is beyond the expectation of a fair market value, for reasons of political or social concerns governments will intervene in the market and establish limits on such things as wages, apartment rents, electricity, or agricultural commodities. Government uses price ceilings and price floors to keep prices below or above market equilibrium. (Stone, 2012, page 68)

South Dakota use to have very strict laws on the amount a lender could charge a borrower. Interest rate charges were highly regulated and because of this banks

The United States lending industry’s main focus has become accentuating profits; therefore, they have made it impossible to live without a credit card in today’s economy and to avoid being taken advantage of by the banks. James Scurlock, director and producer of the film, “Maxed Out”, devotes his movie to informing the audience of the credit card system and its many flaws and gives examples of people who are majorly affected by the pressure the lenders apply. Throughout the movie, numerous statistics, and expert testimonies are presented, as well as comparisons and appeals to emotion. Through the use of this support Scurlock, is able to convey his overall message and propose numerous minor arguments that clarify

The price of rentals decreased to create less quantity that is available for rent creating an equilibrium and decrease in surplus. This is a hard decision to lower the price significantly but will continue to create revenue for the property management company while decreasing supply of vacancy.

When rent controls took affect, it impacted the equilibrium of supply and demand for rental properties by capping the prices and decreasing profitability for the landlords. With a price ceiling in affect, more rental properties were demanded by apartment seekers because of the low prices, but less properties were supplied. Tenants that already lived in the apartments were forced to stay because of the bargain price, but they were either closely watched for any violations or paid to leave so the landlord would be exempt from rent control. Home builders became uninterested in new construction because of the rent controls. Annual construction dropped from 30,000 units per year to 10,000 units. Excess demand in the rent controlled market spilled over into the free markets causing their rental prices to go higher. This made the rent controlled apartments even more appealing to new home seekers.

Gentrification is a major reason for the increase in rent prices throughout New York City. Harlem rent prices have gone up over the past years because of new condominiums and businesses that are being built in neighborhoods. The displacement of residents leads to an increase of people becoming homeless in the city. According to the author, Ivan Pereira, “Harlem saw a 9.4 % average rent price increase during that same period from $2,191 last year to $ 2,397 in January” (Pereira 1). The change causes longtime residents to move out because of a variety of factors including unaffordability, pressure from property owners, diminishing or lack of stores that cater to them and many more. The more condominiums and business’s being built makes living

A price floor is the lowest legal price a commodity can be sold at. Price floors are used by the government to prevent prices from being too low (Taylor, B. 2006).

Since middle and upper classes are moving into these areas, it causes the price of surrounding houses to increase. In this

The legal minimum and maximum prices for goods and services are implemented by governments, in an effort to be able to manage the economy by direct intervention. Price ceilings and price floors are two types of price controls. The legal maximum of price for a good or service is a price ceiling and the legal minimum price of good or service is the price floor. The government may impose both a price ceiling and a price floor but typically only selects one for a specific good or service. Prices are formed by a free market when there is a balance between supply and demand of the good or service. When the legal price is different than that of the market price it will create either an excess in supply or an excess in demand. When a price ceiling is imposed it will create shortages, while having no effect on the quantity supplied. Shortages of goods and services cause consumers to compete robustly over the restricted supply. The shortages arrive from suppliers limiting the supply of goods and services due to the price ceiling, not allowing them to make a profit. The opposite holds true with price floors. Having a price floor creates an excess of goods and services and that allows suppliers to be more agreeable to supply. When price ceilings or price floors are implemented, this can lead to the creation of black markets and inefficient allocation to

These companies were highly concentrated in the south due to loose regulation practices and began to travel west. Now it is a massive industry that ranges from small businesses to large corporations. At the top of this industry is Advance America, a national chain that made 4 billion dollars off the interest on roughly 400-dollar loans (Wright, 2011). This seemingly helpful practice has been the victim of a lot of scrutiny as of late. This has caused a shift in the regulations among these companies. Regulations are state mandated and done so according to the demographic region of the company. Since the regulation occurs at state level. That said the states that do permit these loans regulate the many aspects of the loan, avoiding mistreatment of the borrowers. In most states the borrower must make at least 1,000 dollars (full-time at minimum wage) and be employed by the same employer for a consecutive 3 months. This ensures that the borrower has a source of income and can pay back their loans. As a result of some states not permitting this type of loan, many people find themselves driving across state lines in order to receive a loan. State regulations do provide support, but the negative effects of lending companies are increasing.

“Rent control is government control and regulation of the amounts charged for rented housing” This can help low icome persons or families find housing. The problem with rent control is that it can lower housing construction. With construction getting more epensive there is no drive to continue to build. Rent controlled housing also creates bargaining between tenants and landlords including inflation.

The price ceiling is the maximum price a seller is allowed to charge for a product or service. An impact on society includes when the prices are so high of a product, that no one can buy it. A price floor is the lowest legal price a product or service can be sold at. When market price is at its lowest, it may still be too high for consumers to purchase products. Governments can intervene for any purpose, and they are the ones who set these price controls.

• “We believe the new rent is very reasonable and below the market value”; and