ECON103_A3_Spring09 - ECON 103, Spring 2009 Simon Fraser...

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ECON 103, Spring 2009 Simon Fraser University Assignment 3 Due in tutorials in the week of March 16 th . Problem 18 from Ch. 10 of the required textbook. (3 marks) Question 1. (4 marks) Compare the impact of rent control when the supply of housing is fixed and when supply curve is upward sloping. For full marks Draw two diagrams representing the two situations, on each diagram indicate competitive equilibrium (denote P * and Q * ), Show price and quantity that is actually rented out under rent control (denote P and Q ). Compare and comment on what happens to quantity of housing rented in each case. Conduct welfare analysis: show any gains and losses in consumer and producer surplus in each case, comment which changes in the surpluses are a welfare transfer and which are a welfare loss. Why is welfare loss different in these situations? Question 2. (3 marks) Consider 2 cases (i) supply curve is perfectly elastic and demand curve is downward sloping. (ii) demand curve is perfectly inelastic and supply curve is upward
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This note was uploaded on 09/13/2009 for the course ECONOMICS Econ 103 taught by Professor Iryina during the Spring '09 term at Simon Fraser.

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ECON103_A3_Spring09 - ECON 103, Spring 2009 Simon Fraser...

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