Lowincomesville is a poor town. The mayor has decided to impose a law to cut all rental rates on apartments in half and to fix them at this level. Will this help the poor? Why or why not? Be sure to distinguish between the short run and the long run
The immediate effect will be a benefit to those currently living in apartments. Such a move, fixing rents below their equilibrium value, will create a shortage. We would expect a decline in rental housing as well as a decline in quality. In the long run, the poor may be worse off due to a lack of rental housing.
You might also like to view...
The short-run supply curve for a perfectly competitive firm is its marginal cost curve above the minimum point on the
A) average fixed cost curve. B) average variable cost curve. C) average total cost curve. D) demand curve.
Burns (1934) argued that retardation and decline in some industries are
(a) healthy for a growing and developing economy because resources are released for use in productive sectors. (b) healthy only for the competitors of the declining industries. (c) unhealthy for a growing economy because resources are idle in the declining industries. (d) unhealthy for a growing economy because the released resources are used unproductively by the competitors of the declining industries.