Abby Kelly Food and Recourse Economics February 21, 2008Homework 2Part A: 3)B. When the government puts a price ceiling on apartments, for example the ones in New York, it can be hard for the tenants to make a profit and if they do not much of one. When someone slips them money “under the table” it gives them extra money. Because the rent cost are lower than what equilibrium would have them at there is more demand than supply. When the extra payment is made it is also a way to get an apartment that otherwise might not be available to a person. C. If the government eliminated rent controls in places like New York where there is a limited supply only the people that can pay the highest amount of money would be able to have a place to live. That is because whenever supply is higher than demanded it turn in to a bidding war you could say and the highest bidder wins. D. The government implemented rent controls with a good cause, to help the poorer people still be able to afford a place to live.
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