07___Ch_06___Econ_101

07___Ch_06___Econ_101 - Econ 101 Introduction to...

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  Econ 101 Introduction to Microeconomics Professor Richard V. Burkhauser 6 6 Supply, Demand, and Government Policies
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Econ 101 – Professor Burkhauser Key Concepts price ceiling, p. 114 price floor, p. 114 incidence of a tax, p. 124
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Econ 101 – Professor Burkhauser Question 6.1: Behavioral Change In the presence of rent control, as we move from the short run to the long run, we should expect the shortage of apartments to: a) increase as the supply curve for apartments becomes more elastic b) increase as the supply curve for apartments becomes more inelastic c) decrease as the supply curve for apartments becomes more elastic d) decrease as the supply curve for apartments becomes more inelastic
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Figure 6.1 Rent Control in the Short Run and in the Long Run (a) Rent Control in the Short Run Quantity of Apartments 0 Rental Price of Apartment Controlled rent Set at equilibrium level p 0 S 0 q 0 D 1 (old+new) D 0 p 1 A Short run housing shortage q 1 B
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Figure 6.2 Rent Control in the Long Run (b) Rent Control in the Long Run S 0 Controlled rent D 0 D 1 B S 1 (Long Run) A Quantity of Apartments 0 Rental Price of Apartment p 0 p 1 q 0 q 1 q 2 Long run housing shortage
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Econ 101 – Professor Burkhauser Questions 6.2: Behavioral Change Which of the following statements about the effects of rent control is correct ? a) The short-run effect of rent control is a surplus of apartments, and the long-run effect of rent control is a shortage of apartments. b) The short-run effect of rent control is a relatively small shortage of apartments, and the long-run effect of rent control is a larger shortage of apartments. c) In the long run, rent control leads to a shortage of apartments, and the quality of available apartments is improved by rent control. d) The effects of rent control are very noticeable to the public in the short run, because the primary effects of rent control occur very quickly.
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Econ 101 – Professor Burkhauser Question 6.3: Behavioral Change Historically, the effect of rent ceilings in New York City since World War II has been to:
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07___Ch_06___Econ_101 - Econ 101 Introduction to...

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