ECON 101 2Midtermreview

00 a pack more and sellers receive 50 a pack less a

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Unformatted text preview: a price is regulated and there is a shortage, search activity increases. Ø། Search activity is costly and the opportunity cost of housing equals its rent (regulated) plus the opportunity cost of the search activity (unregulated). Ø། Because the quantity of housing is less than the quantity in an unregulated market, the opportunity cost of housing exceeds the unregulated rent Ø། Black Markets Ø། A black market is an illegal market that operates alongside a legal market in which a price ceiling or other restriction has been imposed. Ø། A shortage of housing creates a black market in housing. Ø། Illegal arrangements are made between renters and landlords at rents above the rent ceiling—and generally above what the rent would have been in an unregulated market. In...
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