Analysis of a Rent Ceiling with Shifts in Demand and Long-Run Supply (Figure 8.25)

A local government sets a maximum price for concert tickets at $50 to make events more affordable. At this price, 3,000 fans want to buy tickets, but the venue is only willing to sell 1,500 tickets. How many tickets will actually be sold, and why?

Agricultural Price Supports

A market is in disequilibrium due to a government-imposed price control. Match each market scenario with the correct description of which 'side' of the market determines the actual quantity of the good exchanged.

Impact of a Minimum Wage on Employment

A government imposes a binding price floor on raw wool, setting a price above the market equilibrium. This policy leads to a situation where wool producers are willing to supply a larger quantity of wool than textile mills are willing to purchase. In this scenario, the actual quantity of wool sold in the market will be equal to the quantity supplied by the producers.

Market Outcomes Under Binding Price Controls

The market for rental apartments in a city is described by the following equations: Demand is Qd = 20,000 - 10P and Supply is Qs = 5,000 + 5P, where P is the monthly rent. If the government imposes a maximum rent of $800 per month, the actual number of apartments rented will be ____.

In response to a public health crisis, a government imposes a strict price cap on a life-saving drug, setting the price below the level where the quantity demanded equals the quantity supplied. Which of the following statements most accurately analyzes the resulting market outcome?

Evaluating a Fuel Price Cap Policy

Consider the market for unskilled labor where the wage is the price. A new law establishes a minimum wage that is above the market's equilibrium level. At this new, higher wage, 5,000 people are willing to work, but businesses are only willing to hire 3,500 people. Which of the following statements accurately analyzes the outcome in this market?

Rent Ceiling

Analysis of a Rent Ceiling with Shifts in Demand and Long-Run Supply (Figure 8.25)

Summary of US Rent Control Research

Assessing a Rent Freeze Policy

A city government observes that rapidly rising housing costs are forcing many long-term residents and essential public service workers to move out. In response, the government institutes a policy that caps rental prices below the level the market would naturally set. This action is taken despite warnings that it may lead to a shortage of available rental units. Based on this scenario, what is the most likely primary justification for the government's decision?

The Rent Control Debate

A government's decision to implement rent control is considered economically irrational solely because it results in a housing shortage and moves the market away from a state of maximum total surplus.

Match each housing policy rationale with its most likely economic consequence.

The Rent Control Trade-off

A city government implements a rent control policy that sets a maximum legal rent below the market-clearing price. While acknowledging this may lead to a housing shortage, the stated goal is to protect vulnerable residents from displacement. Which of the following scenarios would represent the successful achievement of the government's primary stated goal, even at the expense of market efficiency?

Evaluating Housing Policy Alternatives

Evaluating the Success of a Rent Control Policy

The City Council's Dilemma