Question

In: Economics

5 A. How do the ‘four alternative forms of allocation’ manifest themselves in a city with...

5 A. How do the ‘four alternative forms of allocation’ manifest themselves in a city with ‘pure’ rent control, in theory? 5. B. What, exactly, is “black market” activity? How can it harm society, in theory 6. Why do most cities that CLAIM they have ‘rent control” end up allowing the landlord to raise the rent 5% a year or 7% a year Doesn’t this undercut the goals of any rent control law 7. Some cities are imposing a true ‘ceiling’ or cap or ‘freeze’ on rents during the pandemic. Is this a good idea? Why 8. Should our state outlaw all evictions during the pandemic? Why or why not (I guess you can tell I REALLY CARE about this one!!

Solutions

Expert Solution

Answer 5A: Allocation is function performed by government in order to ensure social welfare. It refers to influencing the provision of goods and services in the economy that creates conditions to promote competition among producers, as well as the welfare of consumers. Under pure rent control policy government aims at fixing limit of rent charged by landlords from tenants. Allocation function performed by government here helps in fixing limit in order to avoid exploitation of tenants.

Answer 5B: Black market is part of parallel economy in which people don't report income earned by rent. In this landlord and tenant compromises with each other on rent rate due to rising demand trends. This actually harm society by inflating rent rates and hence lead to exploitation and increased purchasing power leads to general inflation.

Answer6 : This is so because to ensure that they are following all the rent laws but actually it not happens in reality they found other way to ensure high earning from rent and that cause uncut in rent control laws.

Answer7 : Yes , this is good Initiative by government to freeze the rent during pendamic that will help those people to sustain who are unemployed or having low income earning and will help to control inflation that could be due to more earning to land lords which could increasing purchasing power.

Answer8 : State should outlaw all evictions during pendamic because some people could be suffering from low income crises and by doing this state can do social welfare of those people who are bearing that crises. But in some cases it should not be outlawed exceptional cases like if someone is doing wrong activities in premises of landlord or the things that are criminal in nature . In those cases evictions should not be outlawed otherwise it is good initiative in order to protect interest of poor people.


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