Microeconomics Mod2case

Microeconomics2006 Page : 11 ) Rent take is a polemical issue . The floor of deal control is that if the market is allowed to muckle costs by market forces then some groups go away not be able to afford the market prices beca example of their low-income . As wellhead the snag control in practice is not but based on economic principles but whitethorn be based on political and emotional basisHowever based on economic principles and in a market economy bout control may bring the opposite results rather than inexpensive prices in the short and in the long end point as it allow for create shortages and excessive use of rental holding and there fore emergence cost particularly in an inflationary situation . As well the landlords lead not invest in rental keeping because of not earning a profit at the prices set by governmental regulationsBecause of these factors the bestow will be reduced and the rent will increase comp atomic number 18d to the situation where the market determines the rent according to convey and sum factors . That is in economic virtuoso the government intervention will distort the market in a microeconomic sense and there fore allocate scarce resources in an inefficient manner and induce waste . On this economic basis rent control will not be handsome even on the point of view of the tenants because the rents will be much in the short and n the long term even after the rent control is abandoned on that point fore on the basis of microeconomic analysis rent control will be counterproductive and leads to the opposite take of the rent control objective of providing affordable rental property to low-income households in a free market economy with hold anti competitive practices .

However if the rent market has fewer sellers and the competition are not perfect legal measures to frontier anti- Page : 2Competitive or exploitive practices by some landlords are desirable because it enables the market to work efficiently as workable close to perfect competition2 ) In the short term the prices may rise above the regulate 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 redress and in the long-term prices will not be excessively 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 suffice 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 and they may reduce their rent choosing small areas and their fore ordure 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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