Question

Suppose the government imposes a price ceiling on rental housing that is below the market-clearing price....

Suppose the government imposes a price ceiling on rental housing that is below the market-clearing price. The resulting shortage will be
Select one:

A.
smaller the more elastic the demand for rental housing.

B.
greater the more elastic the demand for rental housing.

C.
smaller the longer the controlled price has been in effect.

D.
greater the more recently the controlled price went into effect.

E.
diminished over time.
Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Answer is B.

Shortage occurs when at price ceiling when quantity demanded is higher than quantity supplied. Price ceiling decreases the price, decrease in price increases the quantity demanded and decreases the quantity supplied so shortage occurs. Shortage will be higher if demand is elastic because in elastic demand decrease in price will increase the quantity demanded more as compare to when demand is inelastic.

Below diagram is clearly showing that shortage in case of elastic demand is higher than inelastic demand.

#Please rate positive...thank you

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Consider the market for rental housing in New York City (NYC). The market price for a...
Consider the market for rental housing in New York City (NYC). The market price for a rental home in NYC is $1500 per month. At this price, one million rental homes are bought and sold. In an effort to help low-income individuals afford housing, the city is considering implementing a price ceiling of $1000. a)Construct a supply-and-demand diagram that illustrates the effects of a $1000 price ceiling that is implemented in the rental market in NYC. Do buyers benefit? Do...
The government sometimes imposes a PRICE CEILING on some goods and services in a specific market....
The government sometimes imposes a PRICE CEILING on some goods and services in a specific market. a) Give one specific real-life example. (2.5 POINTS) b) Does a price ceiling create a SHORTAGE or a SURPLUS in the market? (2.5 POINTS) c) Give one reason for the government to impose such a price ceiling in a market. Explain why. (2.5 POINTS) d) Also, mention three (03) problems that a price ceiling creates in a market. Explain. (2.5 POINTS)
Suppose the demand and supply curves for rental housing units have the typical shapes and that...
Suppose the demand and supply curves for rental housing units have the typical shapes and that the rental housing market is in equilibrium. Then, government establishes a rent ceiling below the equilibrium level. a. What happens to the quantity of housing available b. What happens to the quality of housing and why? c. Who benefits from rent control? d. Who loses from rent control? e. How do landlords of rent-controlled apartments try to get tenants to leave?
Suppose that the market for rental homes is rent-controlled, and that the market is iniatlly at...
Suppose that the market for rental homes is rent-controlled, and that the market is iniatlly at the quantity and price implied by the rent control. Other things being equal, the increase in rents that occurs after rent controls are abolished is smaller when: Select one: A. the own price elasticity of demand for rental homes is price inelastic. B. rented homes and owned homes are substitutes. C. rented homes and owned homes are complements. D. the own price elasticity of...
Show the work: Suppose the market demand and supply curves are given by Qd = 20...
Show the work: Suppose the market demand and supply curves are given by Qd = 20 – 3P and Qs = P, respectively. Suppose the government imposes a price ceiling of $2: Calculate the magnitude of the resulting shortage. Calculate the resulting full economic price. That is, the maximum price consumers are willing to pay to avoid waiting in line.
Suppose that the government places a ceiling on the price of a medical drug below the...
Suppose that the government places a ceiling on the price of a medical drug below the equilibrium price. Show why there is a shortage of the medical drug at the new ceiling price. Please add a graph to your explanation.
Suppose government imposes price ceiling on gas. How can this price control lead to long lines...
Suppose government imposes price ceiling on gas. How can this price control lead to long lines at the gas pump? Identify winners and losers of this policy. What can the government do to solve the problem of “long lines”? Show graphs.
Suppose that the government imposes a tax of $1.00 on a litre of gas 1. Suppose...
Suppose that the government imposes a tax of $1.00 on a litre of gas 1. Suppose that the demand for gas is price inelastic. Will the buyer pay more or less than 50 cents? Why? 2. Suppose that the demand for gas is price elastic. Will the buyer pay more or less than 50 cents? Why?
Question 3 a. What is price ceiling and why will the government implement such a policy?...
Question 3 a. What is price ceiling and why will the government implement such a policy? b. The market demand and supply equations for a commodity are QD = 50 - 10P QS = 20 + 2.5P i. What is the equilibrium price and equilibrium quantity? ii. Suppose the government imposes a price ceiling on the commodity of $3.00 and demand increases to QD = 75 - 10P.What is the impact on the market of the government’s action? iii. In...
Describe the impact to a market that was in equilibrium if the government imposes a binding...
Describe the impact to a market that was in equilibrium if the government imposes a binding price floor. Be sure to discuss the effect on price, quantity of supply, quantity of demand, and more than one unintended consequence.
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT