The effect lag occurs because it takes policymakers some time to recognize that a problem exists in an economy

Suppose the government decides that a particular commodity is a luxury and decides to fix its price above the market-determined price. What implications could this policy have?

What will be an ideal response?

The elasticity of supply of rental units in New York City is estimated to be about 0.10. Current price restrictions (price floors) are estimated to decrease the price of rental units by 10% below equilibrium price

By how much would price and quantity supplied change if the price floors were removed from the rental unit market in New York City? A) Price will increase by 10% and quantity supplied will increase by 1%. B) Price will decrease by 10% and quantity supplied will increase by 1%. C) Price will increase by 10% and quantity supplied will decrease by 1%. D) Price and quantity supplied will increase by 10%.