ECO105Y1 Chapter Notes - Chapter 6: Robin Hood, Unintended Consequences, Living Wage
Document Summary
When price is ixed below market-clearing: shortages develop and consumers are frustrated, quanity sold = quanity supplied only. When price is ixed above market-clearing: surpluses develop and businesses are frustrated, quanity sold = quanity demanded only. Governments can ix prices, but can"t force businesses (or consumers) to produce (or buy) at the ixed price: business can reduce output or move resources elsewhere, consumers can reduce purchases or buy something else (subsitutes) Rent control: maximum price set by government, making it illegal to charge higher price: robin hood principle: take from the rich (landlords) and give to the poor (tenants) Housing shortages: giving landlords the upper hand. Subsidize well-of tenants willing and able to pay market-clearing rents. Alternaive policies to help the homeless that do not sacriice market lexibility are: government subsidies to help those who are poor pay rent, government-supplied housing.
