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rent ceiling.docx

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ECON 101
Wokia Kumase

Oct 7 Rent ceiling ~If the rent ceiling is below the equilibrium price, then consumers will demand more and producers will supply less. Then the market will force the price back to the equilibrium price. The price consumers willing to pay will be higher than the equilibrium price. We automatically create underproduction. The MSB>MSC, then the dead-weight loss arises. ~ Fair? In terms of fair rules, it is not voluntary exchange, so it is not fair. In terms of fair results, the supply has decreased, so the poor are not guaranteed to have houses. So it’s not fair, since it is not totally benefit the poor. And also lottery, first-come-first-served and discrimination are not leading to a fair outcome. A labor market with a minimum wage ~price floor(applied to labor market: minimum wage) If the minimum wage is below the equilibrium price, the market works as if there were no minimum wage. If the minimum wage is above the equilibrium price. Demand reduces. Supply increases. Unemployment. The original idea of setting a minimum wage is to make more people improve the
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