As you can see from the article in the prior problem, "Rents Hit All-Time Highs amid Job Growth and Low Vacancy Rates," some people move out as a result of rent increases, while others are ready to pay an even higher rent. Rent control adds yet another aspect by setting a ceiling on what the rental price can ultimately rise to. The supply and demand model can be used to illustrate the mechanism that leads to all these different market outcomes. Consider the market for rental properties in the Inland Empire in Southern California. Suppose that while employment increased by 22% in the Inland Empire, the average rent has increased by 20%. (Assume for a moment that there are no rent control regulations.) Adjust the following graph to illustrate the rent increase by either using the black point (cross symbol) or by shifting the supply and demand curv Hint: Determine whether this scenario leads to a shift in the demand/supply curve or a movement along the demand/supply curve. RENTAL PRICE (Dollars per month) 4000 3600 3200 2800 2400 2000 1600 1200 800 400 0 The Market for Rental Properties in the Inland Empire Supply Demand 0 100 200 300 400 500 600 700 800 900 1000 QUANTITY (Number of vacant units) As a result of the 20% rent increase, the number of vacant units demanded The increase in jobs results in a new equilibrium rent of $ units. Supply New Rent Vacancies Demanded with Price Control Vacancies Supplied with Price Control to units. Adjust the previous graph to show the effect of the increase in jobs. Hint: Determine whether this scenario leads to a shift in the demand/supply curve or a movement along the demand/supply curve. per month and a new equilibrium number of vacancies of
As you can see from the article in the prior problem, "Rents Hit All-Time Highs amid Job Growth and Low Vacancy Rates," some people move out as a result of rent increases, while others are ready to pay an even higher rent. Rent control adds yet another aspect by setting a ceiling on what the rental price can ultimately rise to. The supply and demand model can be used to illustrate the mechanism that leads to all these different market outcomes. Consider the market for rental properties in the Inland Empire in Southern California. Suppose that while employment increased by 22% in the Inland Empire, the average rent has increased by 20%. (Assume for a moment that there are no rent control regulations.) Adjust the following graph to illustrate the rent increase by either using the black point (cross symbol) or by shifting the supply and demand curv Hint: Determine whether this scenario leads to a shift in the demand/supply curve or a movement along the demand/supply curve. RENTAL PRICE (Dollars per month) 4000 3600 3200 2800 2400 2000 1600 1200 800 400 0 The Market for Rental Properties in the Inland Empire Supply Demand 0 100 200 300 400 500 600 700 800 900 1000 QUANTITY (Number of vacant units) As a result of the 20% rent increase, the number of vacant units demanded The increase in jobs results in a new equilibrium rent of $ units. Supply New Rent Vacancies Demanded with Price Control Vacancies Supplied with Price Control to units. Adjust the previous graph to show the effect of the increase in jobs. Hint: Determine whether this scenario leads to a shift in the demand/supply curve or a movement along the demand/supply curve. per month and a new equilibrium number of vacancies of
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:As you can see from the article in the prior problem, "Rents Hit All-Time Highs amid Job Growth and Low Vacancy Rates," some people
move out as a result of rent increases, while others are ready to pay an even higher rent. Rent control adds yet another aspect by
setting a ceiling on what the rental price can ultimately rise to. The supply and demand model can be used to illustrate the mechanism
that leads to all these different market outcomes.
Consider the market for rental properties in the Inland Empire in Southern California. Suppose that while employment increased by 22%
in the Inland Empire, the average rent has increased by 20%. (Assume for a moment that there are no rent control regulations.)
Adjust the following graph to illustrate the rent increase by either using the black point (cross symbol) or by shifting the supply and demand curv
Hint: Determine whether this scenario leads to a shift in the demand/supply curve or a movement along the demand/supply curve.
RENTAL PRICE (Dollars per month)
4000
3600
3200
2800
2400
2000
1600
1200
800
400
0
The Market for Rental Properties in the Inland Empire
0 100
Supply
₂
200 300 400 500 600 700 800 900 1000
QUANTITY (Number of vacant units)
Demand
As a result of the 20% rent increase, the number of vacant units demanded
The increase in jobs results in a new equilibrium rent of s
units.
Supply
New Rent
Vacancies Demanded with Price Control
Vacancies Supplied with Price Control
to
units.
Adjust the previous graph to show the effect of the increase in jobs.
Hint: Determine whether this scenario leads to a shift in the demand/supply curve or a movement along the demand/supply curve.
per month and a new equilibrium number of vacancies of
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