Under the rent controlled measures implemented by the government there was PRICE CEILING introduced in Oman....

Under the rent controlled measures implemented by the government there was PRICE CEILING introduced in Oman. The tenants and landlords behave differently towards the low rental values for the buildings influencing the demand and supply side of houses in the long run market conditions.
Answer the questions:
Q1. Describe in your own words, the expected behavior of TENANTS in the long run.    [4x1=4 Marks]
Q2. Analyse the behavior of LANDLORDS while the low rents are observed in the market. [4x1=4 Marks]
Q3. Do you think there would be SHORTAGE OR SURPLUS in long run and suggest your opinion to handle such a kind of situation?     [2x1=2 Marks]

Solutions

Expert Solution

Sol :

Price Ceiling is the policy of the government where maximum price for th goods or services is stated by the government.

1) As, Price ceiling imposed the prices which is genraaly below the Equilibrium Price as, if price ceiling price is above the Price of equilibrium then it has no effect on the Market.

So, due to decreases in prices of the rent , it will encourges the people to have the apartment rented and more people will start moving to the cities. therefore , in the long run tenants will will increase the demand for the apartments

As, Price ceiling imposed the prices which is genraaly below the Equilibrium Price as, if price ceiling price is above the Price of equilibrium then it has no effect on the Market.

So, due to decreases in prices of the rent , it will disatisfies the Landlords and in respond of decreases in prices , landlords will not increase the supply or build the new apartments over the time. Ss, it will reduce the supply fo rthe apartments in the long run.

3) In long run , there will be a large Shortages , becuase of increasing in demand and decreasing in supply.

In order to handle the situation which will might create due to shortage is imposing of regulations. (i.e landlords have to provide necessities living condition)

Rahul Sunny answered 1 year ago

Next > < Previous

Related Solutions

Under the rent controlled measures implemented by the government there was PRICE CEILING introduced in Oman....

Under the rent controlled measures implemented by the government there was PRICE CEILING introduced in Oman. The tenants and landlords behave differently towards the low rental values for the buildings influencing the demand and supply side of houses in the long run market conditions. Answer the questions: Q1. Describe in your own words, the expected behaviour of TENANTS in the long run. [4x1=4marks] Q2. Analyse the behaviour of LANDLORDS while the low rents are observed in the market. [4x1=4marks] Q3....

What types of measures are implemented to protect controlled substances?

One common example of a price ceiling is rent control. In many cities, the local government...

One common example of a price ceiling is rent control. In many cities, the local government places a ceiling on rents that landlords may charge their tenants. The goal of this policy is to help the poor by making housing more affordable. Economists often criticize rent control, arguing that it is a highly inefficient way to help the poor raise their standard of living. One economist called rent control “the best way to destroy a city, other than bombing.” The...

One of the consequences of a government imposed rent control ceiling with the ceiling set below...

One of the consequences of a government imposed rent control ceiling with the ceiling set below the equilibrium rental price is: Select one: a. a surplus of apartments. b. a shortage of apartments. c. decreased search activity of people who want to rent apartments. d. an increase in maintenance and additional amenities like swimming pools and free cable

Question 2 1.with the diagrams differentiate between price ceiling and price floor as government intervention measures...

Question 2 1.with the diagrams differentiate between price ceiling and price floor as government intervention measures to market failure. Support with references to the next above 2.use Diagram to explain how a so -called black market can develop when the government intervenes in the price mechanism by fixing prices

Rent control is an example of a price ceiling. Price ceilings keep prices low for consumers....

Rent control is an example of a price ceiling. Price ceilings keep prices low for consumers. We can clearly see that sellers (landlords in this case) are worse off. Consider if there is an argument to be made that consumers are worse off, too. a) After watching the Seinfeld video clip, discuss how some consumers are made better off and some are not in a rent-control situation. b) What kinds of rationing mechanisms would develop to help allocate the few...

Assume in a simple economic example that a binding/effective price ceiling is implemented and in place,...

Assume in a simple economic example that a binding/effective price ceiling is implemented and in place, in a given market for some good, called “Good X”. Next, an economic change occurs in the market. The economic change that occurs is a decrease in the number of buyers in the market. Assume that this is a competitive market, what will happen to the market selling price and the market quantity that is bought and sold in the market for “Good X”?...

1) Explain why rent control is an example of a price ceiling. 2) Explain why price...

1) Explain why rent control is an example of a price ceiling. 2) Explain why price ceilings can lead to shortages in terms of supply and demand. 3) Explain the concept of consumer surplus and producer surplus. What effect does rent control have on consumer surplus and producer surplus? 4) Are you an opponent or proponent of rent control? Provide reasons for your stance.

• In the summer of 1979, our government imposed a ‘price ceiling” - or price control—on...

• In the summer of 1979, our government imposed a ‘price ceiling” - or price control—on gasoline. Why did they do this? What was their goal? 2. What went wrong, exactly? 3. Often, when the price of a product or service is held “too low”, a shortage develops and ‘FOUR ALTERNATIVE FORMS OF ALLOCATION’ must step in to take the place of the price system (the ‘highest bidder’ system). What are these four alternative methods? Please describe each one. 4....

A surplus may occur if: a. the government imposes a price ceiling. b. the government imposes...

A surplus may occur if: a. the government imposes a price ceiling. b. the government imposes a price floor. PLEASE ANSWER ONLY IF YOU ARE 100% CORRECT

Subjects