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Chapter 3: Q. 48 (page 79)

Can you propose a policy that would induce the market to supply more rental housing units?

Short Answer

Expert verified

1. Reduce property tax

2. Low priced building permits

Step by step solution

01

Step1. Introduction

Policy changes are initiated to promote economic growth or achieve some pre determined goal set. Here, the proposed problem is supply of rental house units.

02

Step2. Explanation

1. Reduce property tax

Property tax is the annual amount paid by a landowner to the local government or the municipal corporation of his area.

A cut in property tax makes it inexpensive for landlords to purchase more houses and rent them out with some discount or on low prices which in turn induce the customers to rent houses.

2. Low-priced and timely building permits.

Getting a building permit to build apartments takes a lot of time and money. so if the permits are low priced and on time the timely implementation of the building is possible and then it is rented.

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Most popular questions from this chapter

What is deadweight loss?

We know that a change in the price of a product causes a movement along the demand curve. Suppose consumers believe that prices will be rising in the future. How will that affect demand for the product in the present? Can you show this graphically?
  1. Many changes are affecting the market for oil. Predict how each of the following events will affect the equilibrium price and quantity in the market for oil. In each case, state how the event will affect the supply and demand diagram. Create a sketch of the diagram if necessary.
    a. Cars are becoming more fuel efficient, and therefore get more miles to the gallon.
    b. The winter is exceptionally cold.
    C. A major discovery of new oil is made off the coast of Norway.
    d. The economies of some major oil-using nations, like Japan, slow down.
    e. A war in the Middle East disrupts oil-pumping schedules.
    f. Landlords install additional insulation in buildings.
    g. The price of solar energy falls dramatically.
    h. Chemical companies invent a new, popular kind of plastic made from oil.

Table 3.8 shows the information on the demand and supply for bicycles, where the quantities of bicycles are measured in thousands.

a. What is the quantity demanded and the quantity supplied at a price of \(210?

b. At what price is the quantity supplied equal to 48,000?

c. Graph the demand and supply curve for bicycles. How can you determine the equilibrium price and quantity from the graph? How can you determine the equilibrium price and quantity from the table? What are the equilibrium price and equilibrium quantity?

d. If the price was \)120, what would the quantities demanded and supplied be? Would a shortage or surplus exist? If so, how large would the shortage or surplus be?

Will supply curves have the same shape in all

markets? If not, how will they differ?
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