9.13 Chapter 6

9.13 Chapter 6 - Click to edit Master subtitle style Econ...

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Unformatted text preview: Click to edit Master subtitle style Econ 101 Introduction to Microeconomics Professor Richard V. Burkhauser 6 Supply, Demand, and Government Policies Econ 101 – Professor Burkhauser Econ 101 – Professor Burkhauser Key Concepts • price ceiling, p. 114 • price floor, p. 114 • incidence of a tax, p. 124 Econ 101 – Professor Burkhauser 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 Econ 101 – Professor Burkhauser Figure 6.1 Rent Control in the Short Run and in the Long Run (a) Rent Control in the Short Run Quantity of Apartmen ts Rental Price of Apartme nt Controlled rent Set at equilibrium level p0 S q0 D1 (old+new) D p1 l A Short run housing shortage q1 l B Econ 101 – Professor Burkhauser Figure 6.2 Rent Control in the Long Run (b) Rent Control in the Long Run S Controlled rent D D 1 K B S1 (Long Run) K A Quantity of Apartmen ts Rental Price of Apartme nt p0 p1 q0 q1 q2 Long run housing shortage Econ 101 – Professor Burkhauser 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. Econ 101 – Professor Burkhauser Econ 101 – Professor Burkhauser Question 6.3: Behavioral Change • Historically, the effect of rent ceilings in New York...
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This note was uploaded on 03/14/2008 for the course ECON 1110 taught by Professor Wissink during the Fall '06 term at Cornell.

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9.13 Chapter 6 - Click to edit Master subtitle style Econ...

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