The rental market in a town is considering a rent control law. It implemented, this would lower all rents in the town to $400 per month. Suppose all rentable properties in this town are alike, the current market clearing rent is $500 per month, and that at this market clearing price there are 500 rental units. Further, suppose that it is predicted that with rent control, the number of units available for rent will fall to 400 and there will be 200 units that are not occupied. Assume that the market demand and supply of rental units are linear. Calculate the dollar value of the impact rental law policy on the landlords, tenants and society as a whole
The rental market in a town is considering a rent control law. It implemented, this would lower all rents in the town to $400 per month. Suppose all rentable properties in this town are alike, the current market clearing rent is $500 per month, and that at this market clearing price there are 500 rental units. Further, suppose that it is predicted that with rent control, the number of units available for rent will fall to 400 and there will be 200 units that are not occupied. Assume that the market demand and supply of rental units are linear. Calculate the dollar value of the impact rental law policy on the landlords, tenants and society as a whole
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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