The Price ceiling on gasoline Is Binding 8 ●●● rice o 2 2.∴ but when Gasoline supply falls 1 Price celling 3.… the price celling becomes 4.… resulting in binding… shorts Demand 0 Q1 Quantity of Gasoline
The Price Ceiling on Gasoline Is Binding... P1 Quantity of Gasoline 0 Price of Gasoline Q1 Demand S1 Price ceiling S2 2. …but when supply falls... P2 3. …the price ceiling becomes binding... 4. …resulting in a shortage
Rent Control Rent controls are ceilings placed on the rents that landlords may charge their tenants The goal of rent control policy is to help the poor by making housing more affordable e One economist called rent controlthe best way to destroy a city, other than bombing
Rent Control • Rent controls are ceilings placed on the rents that landlords may charge their tenants. • The goal of rent control policy is to help the poor by making housing more affordable. • One economist called rent control “the best way to destroy a city, other than bombing
Rent control in the short run Rental Price of Supply and A partment Supply demand for apartments are relatively inelastic Controlled rent Shortage Demand 0 Quantity of Apartments
Rent Control in the Short Run... Quantity of Apartments 0 Rental Price of Apartment Demand Supply Controlled rent Shortage Supply and demand for apartments are relatively inelastic