Which of the following statements would most economists not agree with? -Rent controls hurt everyone -Rent controls decrease overall societal welfare - Rent controls hurt poor people and help the rich - None of these answers - Rent control allow for a more equitable distribution of resources

Which of the following statements would most economists not agree with? -Rent controls hurt everyone -Rent controls decrease overall societal welfare - Rent controls hurt poor people and help the rich - None of these answers - Rent control allow for a more equitable distribution of resources

EBK HEALTH ECONOMICS AND POLICY

7th Edition

ISBN:9781337668279

Author:Henderson

Publisher:Henderson

Chapter13: Medicaid

Section: Chapter Questions

Problem 5QAP

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Price Ceilings and Price Floors

Price Ceilings and Price Floors strategy is used by the Government to control the prices of certain goods and services in the market. This method helps the Government to protect the interests of both buyers and suppliers in difficult economic times.

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What 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…
Consider rent control (a price ceiling). Who does rent control intend to benefit? Discuss some of the potential unintended consequences of rent control.
In a supply-demand diagram, a real estate market rent control regulation keeps the rent for 1 bedroom apartments below the market price. What consumer surplus is gained by consumers that is also producer surplus lost by producers? What consumer surplus is lost by consumers that is not gained by producers? What producer surplus is lost by producers that is not gained by consumers?
Which of the following is the most likely result of a rent control law that creates a binding price ceiling? A shortage of rentable homes. A surplus of rentable homes. The quality of rental homes will increase. All people will be able to rent a home.
Discuss how the equilibrium price and quantity change when a change in demand occurs and the supply stays constant, and when a change in supply occurs and the demand stays constant. How do price controls affect the market? Provide a real-world example that takes consumer surplus and producer surplus into consideration.
In 1994, 565 economists sent President Bill Clinton a letter warning against the economic consequences of price controls that played such a prominent role in his healthcare reform plan. The price controls included mandated fee schedules for a fee for service medical plans, perspective budgets for regional health alliances, increases in health insurance premiums tied to the cost of living, and price ceilings on prescription drugs. Discuss the economics of price controls. Under what circumstances do they accomplish their intended purpose? When do they fail?
Rent Control (a) Use the market diagram to illustrate the imposition of a rent ceiling above the market equilibrium price. What can you explain from the graph? (b) The equilibrium price in the housing market is very high. What do you think will happen if the government imposes a very high price ceiling that is below but very close to the equilibrium price on the housing market, because a politician owns housing units in certain areas? How does that affect the poor and the market for housing? (c) Can you identify any losses or gains? Explain.
Problem 6. See the figure below. If the government decides to restrict the quantity that is sold to 100: 6.1. How much of the good will be sold at that price? 6.2. What is the demand and supply price at that quota? 6.3. What is the quota rent in this market? Who gets the quota rent? Price 20 15 10 A B D LL F C E 100 250 Quantity S D
Suppose the market for product X is described by the following equations. QD=600-2P and QS= -150+3P, where P is price in dollars and Q is the quantity in thousands. Calculate the equilibrium price and quantity in a free market. Now suppose that the government pays a subsidy of $20 per unit of product X. Calculate the buyer's price, the seller's price, and the equilibrium quantity Why does a tax create a deadweight loss? What determines the size of this loss
Using a supply-demand diagram, determine the changes in consumer surplus (CS) and producer surplus (PS) when a price ceiling is imposed. That is, show the change in the areas of CS and PS from when there was no government intervention to when the price control is imposed.
The government often meddles in markets, using price ceilings and price floors and taxes which move the market away from free market equilibrium. Should the government meddle in markets? When should it meddle? Should there be rent controls or other price ceilings? Should the government set a minimum wage be $15? Should the government control the price of life saving medicine, such as insulin? Should they set a price ceiling? Or use taxes? How does elasticity of demand affect who will pay the tax? What are some reasons that the government should meddle in markets using price controls and taxes?
Which group is a price floor intended to benefit? consumers producers The Government