Microeconomics Mod2case

Microeconomics2006 Page : 11 ) Rent visualize is a disputed issue . The bottom of affiance control is that if the market is allowed to fructify determines by market forces then some groups ordain non be able to afford the market prices beca utilize of their low-income . As easy the tear control in practice is non entirely based on economic principles but may be based on political and emotional basisHowever based on economic principles and in a market economy crosscurrent control may bring the opposite results rather than low-priced prices in the short and in the long verge as it result create shortages and excessive use of rental situation and there fore append cost particularly in an inflationary situation . As well the landlords go forth not invest in rental topographic point because of not earning a profit at the prices set by governmental regulationsBecause of these factors the offer will be reduced and the rent will increase compargond to the situation where the market determines the rent according to exact and preparation factors . That is in economic star the government intervention will distort the market in a microeconomic sense and there fore allocate scarce resources in an unable manner and induce waste . On this economic basis rent control will not be jolly even on the point of view of the tenants because the rents will be more(prenominal) in the short and n the long term even after the rent control is abandoned at that place fore on the basis of microeconomic analysis rent control will be counterproductive and leads to the opposite conclusion of the rent control objective of providing affordable rental property to low-income households in a free market economy with extra anti competitive practices .

However if the rent market has few sellers and the competition are not perfect legal measures to sic anti- Page : 2Competitive or exploitive practices by some landlords are desirable because it enables the market to work efficiently as doable close to perfect competition2 ) In the short term the prices may rise above the set price as the demand and supply price may be higher than the regulated price However as the price increases more landlords will be attracted to provide rental properties as they become more profitable and the supply curve will move to the adjust and in the long-term prices will not be to a fault high compared to regulated price . As well the price increases will induce rental property users to use less(prenominal) areas of land and economize on land use and sack up available that land for other more productive use of land than the housing market . In other wards the low-income tenants will face a more prices in the short-term even they may reduce their rent choosing small areas and their fore freighter economize land use . They may be economically disadvantaged if they have big families . However the abandoning of rent control will not create short supply in the short and long term if the land -lords perceive the rent control reform is permanent and...If you want to get a full essay, order it on our website: Ordercustompaper.com

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