Question 1: In the October 26th, 2011, edition of The Villager, Joanne Routzahn wrote a letter to...

Question 1: In the October 26th, 2011, edition of The Villager, Joanne Routzahn wrote a letter to the editor titled “Extend student rental moratorium.” Ms. Routzahn is referring to a one-year moratorium on student-rental housing in a designated area surrounding the St. Thomas campus. A particular excerpt from her letter:

Macalester-Groveland is known for its stability with houses and families, children and older adults who take pride in their properties. We have respect for our neighbors and do not disfigure houses to make money. Converting small one-story homes into rental properties with absentee landlords does not add value to our neighborhood. It devalues and detracts from not only that house but the houses next door and the neighborhood in general.

What is the specific market (good or service) that this moratorium is aimed at? Who are the “consumers” in this market? Who are the “producers” in this market?

According to Ms. Routzahn, does this market exhibit a positive or negative externality? Briefly explain. How are the effects of this externality monetized?

Would the private market over or under produce this good / service, relative to the efficient quantity? Briefly explain how you know.

What is a government policy we learned about in class that could correct (“fix”) this problem? Briefly explain how the policy would work.

Expert Solution

Rahul Sunny answered 1 year ago

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