ECON101 Chapter Notes - Chapter 6: Price Floor, Demand Curve, Social Cost

• School: University of Waterloo
• Department: Economics
• Course: ECON101
• Professor: Corey Van De Waal

Document Summary

Recall: according to the fair-rules view, anything that blocks voluntary exchange is unfair, so rent ceilings are unfair. Recall: but according to the fair-result view, a fair outcome is one that benefits the less well off, so the fairest outcome is the one that allocates scarce housing to the poorest. Possible mechanisms when the rent is not permitted to allocate scarce housing. A lottery allocates housing to those who are lucky, not to those who are poor. First-come, first-served allocates housing to those who have the greatest foresight and who get their names on a list first, not to the poorest. Discrimination allocates scarce housing based on the views and self- interest of the owner of the housing. When wage rates are low, or when they fail to keep up with rising prices, labour unions might turn to governments and lobby for a higher wage rate.