ECON 1B03 Lecture Notes - Lecture 6: Surplus Product, Price Floor, Demand Curve

17 views2 pages

whitecrab690

12 Jan 2016

School

Department

Course

Professor

For unlimited access to Class Notes, a Class+ subscription is required.

Shanghaibalcony1234 and 37744 others unlocked

ECON 1B03 Full Course Notes

Verified Note

46 documents

Document Summary

Usually enacted when policymakers believe the market price is unfair to. Government will freeze prices at a predetermined level they feel will make buyers or sellers society better of. A legal maximum on the price at which a good can be sold. It is not binding (not efective) if it is set above equilibrium price. Price ceiling is binding (efective) if it is set below equilibrium price leading to a shortage. Some may convert existing apartments to condos making the. Can lead to: shortage even greater: shortages that worsen over time, inefficient allocation to consumers, wasted resources. Spending a lot of time trying to find the right place. Landlords don"t have an incentive to upkeep the apartment: inefficiently low quality, black markets. A legal minimum on the price at which a good can be sold. Price floor is not binding if set below the equilibrium price. It is binding if set above the equilibrium price, leading to a surplus.

Related Questions

Suppose that the demand and supply schedules for rental apartments in the city of Gotham are as given in the table below.

Rent	Demand	Supply
2,500.00	10,000	15,000
2,000.00	12,500	12,500
1,500.00	15,000	10,000
1,000.00	17,500	7,500
500.00	20,000	5,000

1. What is the market equilibrium rental price per month and the market equilibrium number of apartments demanded and supplied?

2. If the local government can enforce a rent-control law that sets the maximum monthly rent at $1,500, will there be a surplus or a shortage? Of how many units? And how many units will actually be rented each month?

3. Suppose that a new government is elected that wants to keep out the poor. It declares that the minimum rent that can be charged is $2,500 per month. If the government can enforce that price floor, will there be a surplus or a shortage? Of how many units? And how many units will actually be rented each month?

4. Suppose that the government wishes to decrease the market equilibrium monthly rent by increasing the supply of housing. Assuming that demand remains unchanged, by how many units of housing would the government have to increase the supply of housing to get the market equilibrium rental price to fall to $1500 per month? To $1000 per month? To $500 per month?

salmonwombat608

suppose that the demand and supply schedules for rental apartments in the city of gotham

Suppose that the demand and supply schedules for rental apartments in the city of Gotham are as given in the table below.

Rent	Demand	Supply
2,500.00	10000	15000
2,000.00	12500	12500
1,500.00	15000	10000
1,000.00	17500	7500
500.00	20000	5000

1.What is the market equilibrium rental price per month and the market equilibrium number of apartments demanded and supplied?

2.If the local government can enforce a rent-control law that sets the maximum monthly rent at $1500, will there be a surplus or a shortage? Of how many units? And how many units will actually be rented each month?

3.Suppose that a new government is elected that wants to keep out the poor. It declares that the minimum rent that can be charged is $2500 per month. If the government can enforce that price floor, will there be a surplus or a shortage? Of how many units? And how many units will actually be rented each month?

4.Suppose that the government wishes to decrease the market equilibrium monthly rent by increasing the supply of the housing. Assuming that demand remains unchanged, by how many units of housing would the government have to increase the supply of housing in order to get the market equilibrium rental price to fall to $1500 per month? To $1000 per month? To $500 per month?

ultramarinewoodchuck739

ECON 1B03 Lecture Notes - Lecture 6: Surplus Product, Price Floor, Demand Curve

ECON 1B03 Full Course Notes

Document Summary

Get access

Related Documents

ECON 1B03 Lecture Notes - Price Ceiling, Rent Regulation, Economic Equilibrium

ECON 1B03 Lecture : Chapters 6, 8.docx

ECON 1B03 Lecture Notes - Lecture 13: Price Ceiling, Economic Equilibrium, Shortage

Related Questions