Chap003.6 - An Introduction Slide 34 Market Equilibrium ±...

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6 Chapter 3 - Supply and Demand: An Introduction Slide 31 An Unregulated Housing Market Monthly Rent ($/apartment) Quantity (Millions of apartments/day) 1600 2 Supply Demand Chapter 3 - Supply and Demand: An Introduction Slide 32 Rent Controls Monthly Rent ($/apartment) Quantity (Millions of apartments/day) 1600 2 Supply Demand 2400 Controlled = 800 1 3 0 Excess demand = 2 million apartments per month Chapter 3 - Supply and Demand: An Introduction Slide 33 Market Equilibrium ± Other consequences of rent controls z Maintenance will decline and housing quality will fall z Illegal payments z Creation of co-ops and conversion to condominiums z Reduction in household mobility z Discrimination Chapter 3 - Supply and Demand:
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Unformatted text preview: An Introduction Slide 34 Market Equilibrium ± How can we make housing affordable for poor people without using rent ceilings? Chapter 3 - Supply and Demand: An Introduction Slide 35 Rent Controls Monthly Rent ($/apartment) Quantity (Millions of apartments/day) 800 2 Supply Demand 1200 1 3 What is the impact of a rent control set at $1,200/month? Chapter 3 - Supply and Demand: An Introduction Slide 36 Price Controls in the Pizza Market Price ($ per slice) Quantity (1000s of slices per day) Supply Demand Excess demand = 8,000 slices per day 4 Price ceiling = 2 3 8 12 16...
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