ECON 1050 Chapter Notes - Chapter 6: Economic Surplus, Deadweight Loss, Marginal Cost

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amethystlion411

27 Oct 2015

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Rent ceiling: a price ceiling applied to a housing market that, if set below equilibrium, creates a housing shortage, increased search activity, and a black market. Search activity: the time spent looking for someone whom to do business with (ex. A black market: a rent ceiling encourages illegal trading. This creates a lot of loss, which is borne by consumers. Fair-rules view any ceiling that blocks voluntary exchange is unfair. Fair-result view a fair outcomes would be one that benefits the less well off: blocking rent adjustments doesn"t eliminate scarcity, it creates a challenge for the housing market. There are mechanisms to use when rent is not permitted to allocate scarce housing: a lottery. Allocate housing to those who are lucky: first-come, first-served. Allocating housing to those who sign up first: discrimination. Allocating housing based on self-interest of the owner of the housing: when rent ceilings are imposed, other mechanisms make the housing market unfair.

Related Questions

1 . Effects of rent control

Rent controls force landlords to price apartments below the equilibrium price level. An immediate effect is a shortage (excess demand) of apartments, because the quantity of apartments demanded is greater than the quantity supplied at the regulated price.

When cities prevent landlords from charging market rents, which of the following are common long-run outcomes? Check all that apply.

The future supply of rental housing units increases.

The quantity of available rental housing units falls.

The quality of rental housing units falls.

Nonprice methods of rationing emerge.

blackcoyote423

When cities prevent landlords from charging market rents, which of the following are common long-run outcomes? Check all that apply.

The future supply of rental housing units increases.

Efficient use of housing space results.

Nonprice methods of rationing emerge.

The quantity of available rental housing units falls.

Question 1

The shortage in apartments causes by rent control is worse...

		In the long-run, because the long-run supply is more elastic.
		In the long-run, because the long-run supply is less elastic.
		In the short-run, because the short-run supply is more elastic.
		In the short-run, because the short-run supply is less elastic.

2 points

Question 2

Airline regulation of the 1970s produced a similar result to which of the following government interventions?

		Communism
		Rent control laws
		The Affordable Care Act
		Minimum wage laws

2 points

Question 3

What is a price floor?

		A maximum price allowed by law.
		A minimum price allowed by law.
		A maximum price consumers are willing to pay.
		A minimum price consumers are willing to pay.

2 points

Question 4

In 1938, Congress set the first minimum wage at $0.25 per hour. While this was a modest price floor for the country, it was a very large increase for what US territory which was not exempt from the law?

		Arizona
		Puerto Rico
		Cuba
		Hawaii

2 points

Question 5

Which of the following is a possible effect of a price ceiling?

		A surplus of the good.
		Increases in product quality.
		Increased gains from trade.
		People will waste time in lines waiting to purchase the good.

2 points

Question 6

Which of the following is a possible effect of a price floor?

		Decreases in product quality.
		The quantity supplied exceeds the quantity demanded.
		Increased gains from trade.
		A shortage of the good.

2 points

Question 7

Which of the following is a possible effect of a price ceiling?

		Increased gains from trade.
		Increases in product quality.
		A surplus of the good.
		The quantity demanded exceeds the quantity supplied.

ECON 1050 Chapter Notes - Chapter 6: Economic Surplus, Deadweight Loss, Marginal Cost

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