Because the quantity of housing supplied the quantity

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Because the quantity of housing supplied (the quantity available) is less than the efficient quantity, there is a deadweight loss Mechanisms to allocate scarce housing: lottery, first-come first-served, and discrimination New York, San Francisco, London, and Paris have rent ceilings Conclusion: A rent ceiling set below the equilibrium rent creates a housing shortage, increased search activity, and a black market. What are the effects of price floor on a labor market with a minimum wage? Price floor: a government imposed regulation that makes it illegal to charge a price lower than a specified level A price floor set below the equilibrium price has no effect because the prices floor does not constrain the market forces A price floor above the equilibrium price has powerful effects on a market because it prevents the price from regulating the quantities demanded and supplied Minimum wage: when a price floor is applied to a labor market At a wage rate above the equilibrium wage, the quantity of labor supplied exceeds the quantity of labor demanded and there is a surplus of labor
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When min wage is set above equilibrium wage, there is a surplus of labor Min wage frustrates the market mechanism and results in unemployment and increased job search At quantity of labor employed, marginal social benefit of labor exceeds its marginal social cost and a deadweight loss shrinks the firms; surplus and the workers’ surplus Full loss from min wage is sum of deadweight loss and increased cost of job search A 10 percent rise in min wage decreases teenage employment by between 1 and 3% Min wage is not fair because unemployed end up worse off then they would be with no min wage and blocks voluntary exchange Conclusion: Min wage is unfair How do taxes change prices and quantities? Tax incidence is the division of the burden of a tax between buyers and sellers If price paid by buyers rises by full amount of the tax, then the burden of the tax falls entirely on buyers---the buyers pay the tax If price paid by buyers rises by a lesser amount than the tax, then the burden of the tax
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