5. Suppose the demand for housing is given by q - 90-2p and that the supply...

 

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5. Suppose the demand for housing is given by q° - 90-2p and that the supply of housing is given by q²- - p. Suppose further that the government introduces a rent control policy that states that the price of housing cannot exceed 20. (a) Calculate the effects of this policy on consumers' surplus, producers' surplus, and welfare, and show these effects in a diagram. (b) What is the deadweight loss of the policy, and where does it come from? (c) Landlords often charge very large "key fees", parking fees, and furniture rental charges in rent controlled markets. Use your diagram from part (a) to explain why this occurs. 5. Suppose the demand for housing is given by q° - 90-2p and that the supply of housing is given by q²- - p. Suppose further that the government introduces a rent control policy that states that the price of housing cannot exceed 20. (a) Calculate the effects of this policy on consumers' surplus, producers' surplus, and welfare, and show these effects in a diagram. (b) What is the deadweight loss of the policy, and where does it come from? (c) Landlords often charge very large "key fees", parking fees, and furniture rental charges in rent controlled markets. Use your diagram from part (a) to explain why this occurs.

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a Given Demand for housing q 90 2p Supply of housing q p Rent control price pmax 20 With rent contro... View the full answer