ECON 2020 Critical Thinking Assignment - Metropolitan City Housing
- Describe the current market price and quantity for rental housing in Metropolitan City then explain the single most important problem or issue of concern that is likely to arise in the rental housing market in Metropolitan city if the price of housing units is set a $1,000.
As the demand of the houses in this city increase, the process of the rent also increases. With this supply also increase, but when the prices decrease demand also decrease but that time supply of the houses decrease. People charges the rent houses with their own wants. One of the important problems that arises in the rent housing is lowering the prices. Government implements the rules and nobody can change the rent above to the $1000. With this government, establish clear rules and regulations for renting hoses for facilitating the people. This thing directly affect to the profit of the people who give houses on rent with the heavy amounts as a rent charges.
- As an expert in supply and demand explain what information or facts in Fig 1 you would emphasize to express your concern to government officials about the government’s proposed pricing policy for rental housing.
With the increase in the demand of the houses in this city, supply of the houses also increases. According to the figure when the demand of the rental housing is 1500, then the supply of the houses is 500. However, with the increase in the demand supply also increase, therefore when demand reached 2000 then the supply of the houses reached to the 1500. A point comes when the demand or the supply of the houses become equal that is called the equilibrium point. At this point demand and supply of the houses is 750. Government pricing policy for the rental housing is aim to ensure affordability about the quality of the houses on the rental market. Generally, rental regulation of the pricing is to control the prices, standards for the termination to tenancy. It is essential for the governments of the different countries to establish the clear rules and regulation for getting the houses on rent so that people have not face different problems to getting the access of the houses. Beside this sometime people pay heavy amounts for these focuses, therefore government have to establish clear rules. If any person terminates these rules, government of the countries must have to take action against that person.
- If the Metropolitan city sets the price of rental housing at $1,000 explain how the quantity demanded and quantity supplied is changed.
If the Metropolitan city set, the prices of the rental housing then by changing the demand the quantity of the supply will also be changes. In Metropolitan city the demand of the houses, depend on the prices of the houses. As the prices of the houses will be decreased in this city, then the demand of the houses will also be increased then supply will obviously will increase. With this when the demand of the houses in this city will increase then the management of the housing society will change heavy prices for earning large amount of profit. By the increase or decrease of the demand, the supply houses will be increase or decrease. The point when both demand and supply will become equal that point will be called the equilibrium point.
- Explain the assumptions that are made in analyzing the model of the rental housing markets in Metropolitan City shown in Fig 1 - Metropolitan City Housing Model
According to the Metropolitan City Housing Model as the demand of the houses increases, the supply also increases. By increase in the demand, the prices of the houses also increase. When demand of the houses is 1500 then the prices of the houses are 2000, in the same way when demand increases prices will also be increased in the same way. When demand will be 1750 then the price will be 2250. By the increase in the demand of the houses, supply also increases. The demand depends on the prices, when the prices will be low then the demand will increase but the supply will be decreased. Government has to face the rent of the houses like $1000 so that people have to face no problems.
- Describe the inefficiencies, consequences, or limitation from the government’s imposition of a $1,000 maximum rent on housing units in Metropolitan City given the assumptions you identified in question 4.
In the Metropolitan city government have to limit the rent of the houses which is $1000, and if any person will exploit the rule then they have to punish that person. Government has to take the effective action against the people who will not follow these rules and regulation.
- Given the consequences and implications of the government’s pricing policy with regard to rental housing, what recommendations or conclusions or suggestions would you recommend the Metropolitan City take to insure the most efficient housing market.
For rental housing government of the different countries have to create the special rules and regulation, and must have to implement in all the places for facilitating the different people who want to take houses on rent. Because different people in Metropolitan city charge the rent as they want. By the increase in the demands of the houses, the rent of the houses also increases. There is the positive relation among demand and prices. Therefore, governments have to create the special rules for renting housing.