4 Economic Efficiency Government Price Setting And Taxes
{"Image DocumentName": "Government Intervention in the Market: Price Floors and Price Ceilings", "Image ImageDescription": "4.3 LEARNING OBJECTIVE. Explain the economic effect of government-imposed price floors and price ceilings. Price Ceilings: Government Rent Control Policy in Housing Markets. FIGURE 4-9. The Economic Effect of a Rent Ceiling. Without rent control, the equilibrium rent is  1,500 per month. At that price, 2,000,000 apartments would be rented. If the government imposes a rent ceiling of  1,000, the quantity of apartments supplied falls to 1,900,000, and the quantity of apartments demanded increases to 2,100,000, resulting in a shortage of 200,000 apartments. Producer surplus equal to the area of the blue rectangle A is transferred from landlords to renters, and there is a deadweight loss equal to the areas of yellow triangles B and C. Don\u2019t Let This Happen to YOU! Don\u2019t Confuse Scarcity with a Shortage YOUR TURN: Test your understanding by doing related problem 3.16 at the end of this chapter.", "Image XResolution": "37", "Image YResolution": "37", "Image ResolutionUnit": "Pixels/Centimeter", "Image Software": "SlidePlayer", "Image YCbCrPositioning": "Centered"}