Housing policy analysts debate the best way to increase the number of housing units available to low

Feb 3rd, 2012
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a- With a price ceiling at PC, the quantity bought and sold is QC, indicated by point A. The ceiling at PC is eliminated and the rent returns to the market equilibrium E1, with an equilibrium rent of P1. The quantity supplied increases from QC to the equilibrium quantity Q1. At the same time, you should expect the quality of rental housing

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11) Housing policy analysts debate the best way to increase the number of housing units available to low income households. On strategy -the demand side strategy- is to provide people with housing vouchers, paid for by the government that can be used to rent housing supplied by the private market. Another- a supply-side strategy- is to have the government subsidize housing suppliers or to build public housing.a) Illustrate supply- and demand side strategies using supply and demand curves. Which result in higher rents?b) Critics of housing vouchers (the demand side strategy) argue that because the supply of housing to low income households is limited and does not respond to higher rents, demand vouchers will serve only to drive up rents and make landlords better off. Illustrate their point with supply and demand curves.a- With a price ceiling at PC, the quantity bought and sold is QC, indicated by point A. The ceiling at PC is eliminated and the rent returns to the market equilibrium E1, with an equilibrium rent of P1. The quantity supplied increases from QC to the equilibrium quantity Q1. At the same time, you should expect the quality of rental housing to improve. One of the inefficiencies caused by price ceilings is inefficiently low quality. For example, an improvement for which the renter would be willing to pay $10 is not done even if the cost to the landlord is $2, since the landlord cannot pass along the cost to the renter. As the rent returns to the equilibrium re

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