MICROECONIMICS
5th Edition
ISBN: 9781319372101
Author: KRUGMAN
Publisher: MAC HIGHER
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Chapter 5, Problem 13P
To determine
To answer:
Suppose it is decided that rent control in New York City will be abolished and that market rents will now prevail. Assume that all rental units are identical and so are offered at the same rent. To address the plight of residents who may be unable to pay the market rent, an income supplement will be paid to all low-income household equal to the difference between the old controlled rent and the new market rent.
- Diagrammatically, the impact of the elimination of rent control on the rental market. Also describe its effect on quantity and quality of the rental housing supplied.
- Again, using a diagram, the effect of income supplement policy on the market. Compare it with the results in part (a).
- Whether tenants, landlords are better off or worse off and is the society better off or worse off.
- Whether it is correct from the political standpoint to adopt a rent control policy rather than an income supplement to help low-income people pay for their rent.
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