Macroeconomics
11th Edition
ISBN: 9781260506891
Author: Colander
Publisher: MCG
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Question
Chapter 5, Problem 5QAP
(a)
To determine
Economic effects of rent controls and that in theory.
(b)
To determine
Appropriateness of the rent control mechanism.
(c)
To determine
Appropriate mechanisms to address the inequality.
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Students have asked these similar questions
Consider rent control (a price ceiling). Who does rent control intend to benefit? Discuss some of the potential unintended consequences of rent control.
What are the main goal or goals of rent control (holding rent below equilibrium rent; price ceilings.)?
Be precise. In other words, what is the overall social/economic purpose or objective of rent control or rent stabilization?
Suppose the rent control (price ceiling) in California will be nullified for a year and that market rents will now be institutionalized. Assume that all apartment units are of identical structure and so are offered at the same rent. To address the plight of the residents, especially those who may be unable to pay the market rent, an income subsidy will be given to all low-income households equal to the difference between the old controlled rent and the new market rent.
1. Are the renters or tenants better or worse off as a result of these policies? What about the rentees or the landlords, are they better or worse off?
Chapter 5 Solutions
Macroeconomics
Ch. 5.1 - Prob. 1QCh. 5.1 - Prob. 2QCh. 5.1 - Prob. 3QCh. 5.1 - Prob. 4QCh. 5.1 - Prob. 5QCh. 5.1 - Prob. 6QCh. 5.1 - Prob. 7QCh. 5.1 - Prob. 8QCh. 5.1 - Prob. 9QCh. 5.1 - Prob. 10Q
Ch. 5.A - Prob. 1QECh. 5.A - Prob. 2QECh. 5.A - Prob. 3QECh. 5.A - Prob. 4QECh. 5.A - Prob. 5QECh. 5.A - Prob. 6QECh. 5.A - Prob. 7QECh. 5.A - Prob. 8QECh. 5.A - Prob. 9QECh. 5 - Prob. 1QECh. 5 - Prob. 2QECh. 5 - Prob. 3QECh. 5 - Prob. 4QECh. 5 - Prob. 5QECh. 5 - Prob. 6QECh. 5 - Prob. 7QECh. 5 - Prob. 8QECh. 5 - Prob. 9QECh. 5 - Prob. 10QECh. 5 - Prob. 11QECh. 5 - Prob. 12QECh. 5 - Prob. 13QECh. 5 - Prob. 14QECh. 5 - Prob. 15QECh. 5 - Prob. 16QECh. 5 - Prob. 17QECh. 5 - Prob. 1QAPCh. 5 - Prob. 2QAPCh. 5 - Prob. 3QAPCh. 5 - Prob. 4QAPCh. 5 - Prob. 5QAPCh. 5 - Prob. 1IPCh. 5 - Prob. 2IPCh. 5 - Prob. 3IPCh. 5 - Prob. 4IPCh. 5 - Prob. 5IPCh. 5 - Prob. 6IPCh. 5 - Prob. 7IPCh. 5 - Prob. 8IPCh. 5 - Prob. 9IPCh. 5 - Prob. 10IPCh. 5 - Prob. 11IPCh. 5 - Prob. 12IPCh. 5 - Prob. 13IPCh. 5 - Prob. 14IP
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Similar questions
- Are rent control laws helping/hurting the housing market? What are some of the advantages and disadvantages of rent control? Apart from making and enforcing laws, how can the government enter the housing market system to prevent high rents?arrow_forwardThe difference between rent control and rent stabilization in New York is . . .(a) Rent control was implemented only in Manhattan, where rents were rising most sharply, whilerent stabilization primarily affects the outer boros.(b) Rent stabilization insures that rents neither rise nor fall too fast, whereas rent control only con-strained increases in rents.(c) Rent stabilization was replaced by rent control in 1974 in order to make the rent laws stricter.(d) None of the above.arrow_forwardIdentify and briefly explain 2 advantages and 2 disadvantages of government legislated rent control. (I.E. A price ceiling)arrow_forward
- What is the difference between a price floor and price ceiling? According to the laws of demand and supply and how market equilibrium, efficiency, and equity are reached, do attempts to repeal those laws and market results with price floors and price ceilings justify legislative bodies to implement price controls? A price floor will lead to a transfer of consumer surplus to producer surplus; a price ceiling will lead to a transfer of producer surplus to consumer surplus; both price regulations lead to deadweight losses, which is a loss of surplus to society. Why?arrow_forwardExplain where, in relation to the market equilibrium price, a price floor is set in order to be successful. Historically, what has been the result of agricultural price supports? Why do governments legislate agricultural price supports?arrow_forwardWhat is correct about rent controls? Question 4 options: They cause excess supply (or surplus) at the controlled price, which is lower than equilibrium price. They cause excess demand (or shortage) at the controlled price, which is lower than equilibrium price. They can guarantee everyone will have an affordable apartment They encourage apartment owners to invest in maintenance of the apartment The consumer's income goes up. The good in question is a normal good. What can we expect? (hint - I discuss this in the video lecture) Question 7 options: The demand curve moves to the left. The price of the good decreases. The demand curve moves to the left. The price of the good increases. The demand curve moves to the right. The price of the good decreases. The demand curve moves to the right. The price of the good increases. What is an inferior good? Hint - use the economic definition, not a general dictionary definition! Question 10 options: A good for which demand does not…arrow_forward
- Part 1. The figure below shows the market for rides are services during a typical day. Assume that d1 represents the demand for rides during normal periods. Therefore, on a normal day the normal price for a ride is $16 and 6000 rides are taken. If congress bans surge pricing, it is effectively imposing a price ceiling of $16 shown by the horizontal line labeled PC. Suppose that there is an increase in the demand for rides. Use the drag tool to illustrate the effect of the surge ban, assuming it leads to a shortage of 4000 rides. Part 2. Consider alternative modes of transportation to rides are services such as taxi cabs. How would the ban on surge pricing impact the market for rides by taxi cabs? Use the drag tool to illustrate on the market graph below.arrow_forward) Determine a scenario where government imposes a binding restriction on price (ceiling or floor).arrow_forwardRead the questions and instruction carefully. Show all necessary steps and reasonings that lead to your answers. With the help of supply-demand diagrams, illustrate a binding and a non-binding price ceiling respectively . Label your diagrams carefully. With the help of supply-demand diagrams, illustrate a binding and a non-binding price floor respectively . Label your diagrams carefully. Is rent control a price ceiling or a price floor? In 100-200 words, state and explain AT LEAST TWO cons and/or limitations of rent controls. Create a post and answer the following questions. a) Is minimum wage a price ceiling or a price floor? b) what are some of the pros and cons of imposing a minimum wage? c) Can you think of one other example of price ceiling or a price floor?arrow_forward
- The primary objective of rent control by the government is to_________. a. Make the landlords charge high rent b. Make housing affordable to people c. Make the landlords of the country better off. d. Increase the number of buildings in the country.arrow_forwardIn the market for cotton, the quantity demanded, and quantity supplied are expressed mathematically as QD = 700 - 100P and QS = 150P - 300, where P is the price per pound of cotton and Q measures pounds of cotton. Suppose the government sets a price ceiling of $2.50 per pound of cotton. How big is the shortage resulting from the price ceiling? What is the level of consumer surplus with the price ceiling? What is the value of the deadweight loss associated with the price ceiling?arrow_forwardWhat are two unintended consequences of a rent ceiling, other than the obvious shortage of apartments?arrow_forward
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