2/20 - the number of approvals. Compare the effect of the...

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2/20/08 Suppose the equalibrium price of credit is 33%, and congress is considering a law making it illegal to charge more than 21.5%. Senator Phant is opposed to the law because it will reduce the volume of credit worthy approvements. Senator Key believes the lenders have very small per-unit costs in making loans, and therefore little incentive to raise or lower
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Unformatted text preview: the number of approvals. Compare the effect of the new law under each of these two segments. Answer: We see compare so we draw 2 panels. We title the graphs according to each senator. Then, we know Sen. Key is inelastic b/c the lenders do not care making it hard to walk away from. We insert our price ceiling and label the graph....
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This note was uploaded on 04/18/2008 for the course ECO 2023 taught by Professor O'gorman during the Spring '08 term at South Florida Community College.

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