a)
The impact of the
a)
Explanation of Solution
The given scenarios represent the effect of the
After the price ceiling, homeowners do not have the incentive to give their houses on rent because they are getting rent below the equilibrium rent in the market. Due to lower rent, some house-owners think that it’s not beneficial to rent out spaces. As a result, the number of houses available for rent falls from 4000 units to 3600 units.
A price ceiling is a price control method used by the government to set the price of a product or service in the market. Purchasing or selling that product below that price would be a punishable act.
The government usually sets the price controlling method to safeguard the marginal group or a specific group, but these methods result in various types of inefficiencies in the market.
b)
The impact of the price ceiling on the given incidents.
b)
Explanation of Solution
Due to the fall in rent demand for parking space increases as some people prefer to take their car as an alternative for carpooling. As a result, the demand for parking space rises from 4000 units to 4400 units.
c)
The impact of the price ceiling on the given incidents.
c)
Explanation of Solution
When the government sets a price ceiling at $7 for the parking space, the quantity demanded increases from 4000 units to 4400 units while the quantity supplied falls from 4000 units to 3600 units. Since the quantity demanded exceeds the quantity supplied of houses so a price ceiling generates a shortage of parking space in the market. So, few people stay without getting a parking space.
d)
The impact of the price ceiling on the given incidents.
d)
Explanation of Solution
Since there is a shortage of parking space, some fans arrive early to secure parking. The supporters' early arrival is an example of a waste of resources because they could be doing something more productive with the time they would have spent looking for parking spaces.
e)
The impact of the price ceiling on the given incidents.
e)
Explanation of Solution
The inefficient allocation of resources is demonstrated by the fact that some die-hard fans have given up while parking spaces are being allocated to some less ardent supporters. In this case, resources are distributed to those who value the good less than those who cannot consume it despite having a higher willingness to get the parking space.
f)
The impact of the price ceiling on the given incidents.
f)
Explanation of Solution
Due to the shortage of parking space, the parking-space owner has the incentive to rent spaces to the buyers and pretend they as non-paying friends and family at a higher price than $7 and pretend that buyers are friends and family customers are even ready to pay the higher price to save their time
Want to see more full solutions like this?
Chapter 8 Solutions
EBK KRUGMAN'S ECONOMICS F/AP COURSE
- A linear programming computer package is needed. As part of the settlement for a class action lawsuit, Hoxworth Corporation must provide sufficient cash to make the following annual payments (in thousands of dollars). 6 Year 1 23. 4 Payment 160 185 210 255 285 430 The annual payments must be made at the beginning of each year. The judge will approve an amount that, along with earnings on its investment, will cover the annual payments. Investment of the funds will be limited to savings (at 4% annually) and government securities, at prices and rates currently quoted in The Wall Street Journal. Hoxworth wants to develop a plan for making the annual payments by investing in the following securities (par value = $1,000). Funds not invested in these securities will be placed in savings. Security Current Price 1 $1,055 Rate (%) Years to Maturity 6.750 3 2 $1,000 5.125 Assume that interest is paid annually. The plan will be submitted to the judge and, if approved, Hoxworth will be required to…arrow_forwardPut the sections of Cornell notes in the order of completion.arrow_forwardagree or disagree with the post Hi Class! Egyptian dates are much sweeter! Due largely to their climate and geography, Egypt, Saudi Arabia, Algeria, and Iran produce more dates than either the US or Canada. Dates grow best in hot dry climates with long dry growing seasons, which these nations naturally offer. They also produce a lot of dates because of their extensive agricultural, infrastructure, and centuries-old date-growing expertise. Conversely, the U.S., there aren't many places in Canada and California that are suitable for date farming, only a select few, like the Coachella Valley, in California can produce dates on a large scale. Although California produces some dates, it is not as much as countries like Saudi Arabia and Egypt. Depending only on U.S., because of increased labor and production costs, dates grown in this way may have a limited supply and raise prices. We can obtain a greater supply of dates at competitive prices while maintaining consistent quality by…arrow_forward
- In 1932 babe Ruth made $75,000. How much is that in todays dollars please give the right answer step by steparrow_forwardEvaluate machine XYZ when MARR is 12% per year. Pertinent data are as follows: Machine XYZ Investment cost Expected life Market (salvage) value Annual revenue Annual expenses $10,000 5 years $1,000 $8,000 $4,000 How much is the excess of the cash flow using the Annual Worth Method? Blank 1 Calculate the External Rate of Return. Blank 2 Compute the payback period of the investment. Blank 3 Would you recommend this investment? Explain briefly. Blank 4arrow_forwardPlease make sure to answer each step and show work. Thank you!arrow_forward
Principles of Economics (12th Edition)EconomicsISBN:9780134078779Author:Karl E. Case, Ray C. Fair, Sharon E. OsterPublisher:PEARSON
Engineering Economy (17th Edition)EconomicsISBN:9780134870069Author:William G. Sullivan, Elin M. Wicks, C. Patrick KoellingPublisher:PEARSON
Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage Learning
Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...EconomicsISBN:9781259290619Author:Michael Baye, Jeff PrincePublisher:McGraw-Hill Education