The rental market in a town is considering a rent control law. It implemented, this would lower all rents in the town to $400 per month. Suppose all rentable properties in this town are alike, the current market clearing rent is $500 per month, and that at this market clearing price there are 500 rental units. Further, suppose that it is predicted that with rent control, the number of units available for rent will fall to 400 and there will be 200 units that are not occupied. Assume that the market demand and supply of rental units are linear. Calculate the dollar value of the impact rental law policy on the landlords, tenants and society as a whole

The rental market in a town is considering a rent control law. It implemented, this would lower all rents in the town to $400 per month. Suppose all rentable properties in this town are alike, the current market clearing rent is $500 per month, and that at this market clearing price there are 500 rental units. Further, suppose that it is predicted that with rent control, the number of units available for rent will fall to 400 and there will be 200 units that are not occupied. Assume that the market demand and supply of rental units are linear. Calculate the dollar value of the impact rental law policy on the landlords, tenants and society as a whole

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter6: Supply, Demand And Government Policies

Section: Chapter Questions

Problem 10PA

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