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Economics Presentation For Report
Economics Presentation For Report
Government Intervention in
the Market
The Case
Who bears the heaviest cost when rentals are kept down by –
b) Rental Subsidy:
• monopolistic market
Macro-Economic Factors
Socio-Economic Factors
Equilibrium E Price
300$
New equilibrium E’
Companies
getting less
money after the
rent control.
Loss of Landlords
Before: 300$
Over
Following E’ will
result in over
production
Creates Black
market.
Creates
shortage
Creates More
overpriced
market
Short run =
Producers pay
heaviest cost
Long run =
E’’
Customers pay
heaviest cost.
DWL =
6, 7, 8, 9, 10, 11.
To remove burden
= DD
• = SS
At Market Equilibrium
E:
• Price = R2
• Quantity = Q1
Govt. introduce subsidy
= R3 –R1
Customers pay = R1
Market Equilibrium = E
New Equilibrium = E’
Lowers price = R3
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