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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. Lower price of building permits

Step by step solution

01

Step 1.1. 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 at a lower price which in turn incentivizes consumers to rent houses.

02

Step 2.2. 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 lower in price and ease of access to permits is increased. Therefore the timely implementation of the building is possible and then it is rented.

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Most popular questions from this chapter

Suppose there is a soda tax to curb obesity. What

should a reduction in the soda tax do to the supply of sodas and to the equilibrium price and quantity? Can you show this graphically? Hint: Assume that the soda tax is collected from the sellers.

Review Figure 3.4. Suppose the government

decided that, since gasoline is a necessity, its price

should be legally capped at $1.30 per gallon. What do you anticipate would be the outcome in the gasoline market?

Suppose the price of gasoline is \(1.60 per gallon. Is the quantity demanded higher or lower than at the equilibrium price of \)1.40 per gallon?

Why would a free market never operate at a quantity greater than the equilibrium quantity?

What is the relationship between quantity

demanded and quantity supplied at equilibrium? What is

the relationship when there is a shortage? What is the

relationship when there is a surplus?
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