pc P D Qc SSR Figure 1: Rent Control SLR The following diagram illustrates the market for rental housing in Berkeley. Before rent control, the competitive equilibrium was at Pc and Qc. Rent control limits the price a landlord can charge to P. The short- run and long-run supply curves are indicated. In the short run the number of rental units is fixed. (1) What will be the equilibrium number of rental units in the long-run? Explain the transition. (2) What are the long-run efficiency and distributive effects? Is the imposition of rent control a potential Pareto improvement? Explain. (3) Why has rent control been called the most effective way to destroy, short of bombing, the stock of rental housing in a city?

pc P D Qc SSR Figure 1: Rent Control SLR The following diagram illustrates the market for rental housing in Berkeley. Before rent control, the competitive equilibrium was at Pc and Qc. Rent control limits the price a landlord can charge to P. The short- run and long-run supply curves are indicated. In the short run the number of rental units is fixed. (1) What will be the equilibrium number of rental units in the long-run? Explain the transition. (2) What are the long-run efficiency and distributive effects? Is the imposition of rent control a potential Pareto improvement? Explain. (3) Why has rent control been called the most effective way to destroy, short of bombing, the stock of rental housing in a city?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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