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?

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter3: Demand And Supply

Section: Chapter Questions

Problem 55P: Table 3.9 illustrates the markets demand and supply for cheddar cheese. Graph the data and find the...

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