Question

  XSU is a state university located in the town of Xanadu.   Xanadu is located on a large river with many towns within an easy 15-minute drive. Once, the neighborhoods around XSU where all single-family housing but the growth in prestige in XSU caused a large growth in student enrollment over the years, so more and more of the single-family houses were renovated into student housing.    The city did not zone those neighborhoods for exclusive single-family homes. And, the city has no history of enforcing building codes. Now, the city of Xanadu faces problems of access to parking in those neighborhoods, along with dilapidated student housing.   Both students and neighbors are mounting campaigns to address these issues.

      Moreover, XSU has just finished building off-campus student apartments (which are full), and plans upgrading its out-dated dorms with new ones.   Landlords complain about vacancy rates, which currently run about 8%.   Landlords are upset with the bad publicity along with the “unfair” competition from XSU (XSU pays no property taxes).

     City officials have come up with some alternative plans to deal with these issues. One plan is to limit conversions to student rentals to 30% of a block with all current student rental “grandfathered” in. A competing plan is to enforce building codes with vigorous semi-annual inspections of all rental properties, complete with hefty fines and condemnations.

    

Using demand and supply curves, show and explain the likely effects of successively implementing the 30% conversion restriction.

on the rental price of housing and the quantity of rental housing in Xanadu.

b. on the rental price of housing and the quantity of rental housing in neighboring towns.

2. Show and explain the likely effects of successively implementing the semi-annual inspections of all rental housing

a. on the rental price of housing and the quantity of rental housing in Xanadu

b. on the rental price of housing and the quantity of rental housing in neighboring towns.

3. Explain which proposal you would expect landlords to endorse.

    

4. Explain which proposal you would expect XSU students to endorse.

Answer 1