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
To protect the well-being of the tenants, some legislators in Hong Kong suggest imposing a rent control. Explain the effects of a rent control on the market for rental housing, changes in the behavior of the landlords as a result of, and explain why these imply inefficiency.
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…
"New York City has a long-standing policy of control-ling rents in certain parts of the city—in essence, a price ceiling on rent. Is the market for apartments likely to be efficient or inefficient? What does this imply for the size of total surplus?"
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
- The shortages created by rent controls is largest when demand by tenants is ........and supply by landlords is......... more elastic; less elastic more elastic; more elastic Ⓒunitary elastic; unitary elastic less elastic: less elastic less elastic; more elasticarrow_forwardThe market demand and supply for renting apartments in the Midrand area is given as: Demand: p = 12 000 - 5Qd Supply: p = 800 + 3Qs 5. What is the landlord’s total revenue at the equilibrium price? [1] R7 000 000.[2] R12 000 000.[3] R8 000 000.[4] R1 400 000. 6. If the government implements an effective rent ceiling of R4 100 in the Midrand area, what are the search costs? [1] R0.[2] 2 640 000.[3] 1 320 000.[4] 72 000. 7. What price will the customers be willing to pay on the black market? [1] R5 000.[2] R4 100.[3] R6 500.[4] R1 400.arrow_forwardThe goal of rent control is to facilitate controlled economic experiments in urban areas. help the poor by assuring them an adequate supply of apartments. help the poor by making housing more affordable. help landlords by assuring them a low vacancy rate for their apartments.arrow_forward
- Which of the following is the most likely result of a rent control law that creates a binding price ceiling? A) The quality of rental homes will increase. B) A surplus of rentable homes C) All people will be able to rent a home. D) A shortage of rentable homesarrow_forwardHow are rent controls likely to affect the market for housing in a city? Create a graph illustrating the market for apartments without rent controls to help with your answer. What does it mean, in terms of this market for the rent control to be effective? Would you recommend such a policy?arrow_forwardWhat are two unintended consequences of a rent ceiling, other than the obvious shortage of apartments?arrow_forward
- Under rent control, bribery is a potential mechanism toarrow_forwardWhat 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?arrow_forwardThis problem deals with the effects of a price control (or a price ceiling). Suppose that the market demand curve is given by P = 6- (1/1000)Q and that the market supply curve is given by P 1(1/1000)Q. Note that, in doing the calculations below, it's easier to leave the (1/1000) factors as is without converting to a decimal Substituting this solution back into the demand function, the equilibrium price is P (put two digits after the decimal point). Suppose that the market demand comes from adding up the a) Set the P values equal using the above formulas, and solve for the equilibrium quantity in the market. This quantity is given by Q demands of 1000 identical consumers. Using the above Q solution, individual consumption at the market equilibrium is equal tounits (put one digit after the decimal point) b) Now suppose the government institutes a price control, setting the price of the good at P 2. At this price, the quantity supplied equalsunits (set P 2 in the supply formula and solve…arrow_forward
- 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. Use another diagram to show the additional effect of the income subsidy on the apartment market. What effect does it have on the market rental and quantity of apartments supplied in comparison to your answers toarrow_forwardIdentify and briefly explain 2 advantages and 2 disadvantages of government legislated rent control. (I.E. A price ceiling)arrow_forwardCity A and City B are on the opposite sides of the River. Suppose A imposes rent controls. With the use of diagrams explain what effect these controls will have upon the housing markets in A and B City?arrow_forward
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