Some analysts have argued that lodging reservation website Airbnb is responsible for an increase in rent...

Some analysts have argued that lodging reservation website Airbnb is responsible for an increase in rent and housing prices in most American cities. Recent academic research supports this: a study found that between one eighth and one fifth of the observed increases in rents and home prices in US metropolitan areas between 2012 and 2016 can be attributed to Airbnb.

a) Use the supply and demand model to make sense of these effects in the typical US city. Make sure you clearly define the markets on which you choose to focus, explain which curves are shifting and why, and (if you think this adds to the analysis) justify the shape of the supply and demand curves by discussing their relative elasticities.

b) Over time, what do you expect the impact of Airbnb to be on rental rates and housing prices? Justify your answer using the supply and demand model. Once again, make sure you are clear and explicit about how you are defining the relevant markets and (if you think this helps the analysis) back up your arguments by bringing up elasticities.

Expert Solution

Solution A

Airbnb as marketplace model has adopted sellers to purchase multiple properties and offer retail buyers on rent for particular period which jas immensely beneficial to sellers due to high return on investment. This has led to surge in aggregate demand for buying real estate jnsold properties and significantly shifted the Aggregate demand curve shift rightwards such that prices have rose exponentially for new properties in target market like urban and semi urban areas where collegew, institutions amd corporate are present. The price elasticity of demand therefore is increased.

Solution B

These latest surge and housing prices bokm is been closely monitored by Government amd thus we can expect series of reforms amd regulations in this spacewhich will limit buying and place price caps in future to clear unsold inventory and at same time reduce overall cost lf living to decrease inflation targets. This will cause lower aggregate demand as price caps will delimit potential of buters ajd sellers and aggregate demand curve return to normalcy by shifting leftwards such that supply and demand meet at equilibrium point and thus prices reduce in long run.. The price elasticity of demand thus now reduces.

Rahul Sunny answered 8 months ago

Cultural analysts have argued that privacy is less important to a generation that grew up with...

Cultural analysts have argued that privacy is less important to a generation that grew up with YouTube, Facebook, Twitter, and texting. On the other hand, this same generation has grown up with database technology more ubiquitous and capable than ever before. Think about how many times this week you've been involved (knowingly or not) with database systems. How do you think the tension between privacy and database technology will or should play out as powerful database applications become ever more...

Some have argued that sustainable strategies have been said to be too costly. Others have argued...

Some have argued that sustainable strategies have been said to be too costly. Others have argued that the nature of sustainable strategies (waste reduction) makes these strategies more efficient and effective. Take a position and provide a solid argument for it and back it up with facts and examples where possible.

A history of deposit insurance on the web site of the FDICnotes: "Some have argued...

A history of deposit insurance on the web site of the FDIC notes: "Some have argued at different points in time that there have been too few bank failures because of deposit insurance, that it undermines market discipline, and that it amounts to a federal subsidy for banking companies."a. What does it mean to describe insurance as undermining "market discipline"? From this perspective, why might deposit insurance lead to too few bank failures?b. In what sense might deposit insurance be...

Some macroeconomists have argued that it would be beneficial for the government to run a deficit...

Some macroeconomists have argued that it would be beneficial for the government to run a deficit when the economy is in recession and a surplus during a boom. Does this make sense? Please explain why or why not. And if both are feasible please explain the benefits and negatives of both.

Some economists have recently argued that currency devaluations or depreciations have lost their ability to improve...

Some economists have recently argued that currency devaluations or depreciations have lost their ability to improve the current account balance or trade balance of the industrialized economies. The magazine The Economist, for example, observes that “devaluations do not seem to have provided quite the same boost [to exports] recently.” What is the evidence available on the effects of currency depreciation on the current account balance or the trade balance? Is the Economist correct? Please explain. PLEASE PROVIDE A BRIEF EXPLANATION...

Some critics of freedom of trade between nations have argued that by allowing the imports of...

Some critics of freedom of trade between nations have argued that by allowing the imports of a foreign country into the market of your own country this can threaten the loss of jobs in your domestic economy. Advocates of free trade have responded to these criticizing by explaining why this is not necessary the case, since (a) imports must be paid for with exports; and, (b) that lower priced imports raise the standard of living and frees up resources and...

Some Accountants have argued that Activity Based Costing will be of limited benefit if the overhead...

Some Accountants have argued that Activity Based Costing will be of limited benefit if the overhead costs are primarily volume related or if the overhead is a small proportion of the overall cost. What do you think?

1) Some researchers have argued that paraphyletic groups are not “real” and should not be used...

1) Some researchers have argued that paraphyletic groups are not “real” and should not be used in scientific discussions. What do you think? 2) The fact that organisms evolve by natural selection means that adaptive explanations make sense in biology. Does this mean that every organismal trait has an adaptive explanation?

Some have argued that a Nation State sponsored cyber event will only be initiated at the...

Some have argued that a Nation State sponsored cyber event will only be initiated at the onset of kinetic conflict. In a substantive post (at least 250 words or greater) develop your argument for defining when a cyber event becomes an act of war.

2. Some have argued that the 1980s was a decade in which the international economy grew...

2. Some have argued that the 1980s was a decade in which the international economy grew in importance, with special relevance for the formerly planned socialist economic systems. How have the contours of the international economy changed, and how will the formerly planned socialist systems be integrated into the new world order? write 1/2 page.

Question