Economics 1021A/B Chapter Notes - Chapter 6: Price Ceiling, Economic Equilibrium, Deadweight Loss

• School: Western University
• Department: Economics
• Course: Economics 1021A/B
• Professor: Irene Trela

Document Summary

Rent ceiling: a housing shortage the ceiling is set lower than the equilibrium price, quantity demanded exceeds the quantity supplied. There are more people who want to rent than there are people who are willing to rent their house. If it is loosely enforced, the rent is likely to be close to the unregulated rent. If tightly enforced, it is more likely to be closer to the maximum possible price. This depends of how a rent ceiling allocates housing in the face of a shortage: housing is allocated by: a lottery, first-come first-served, discrimination, none of those would ensure that the poorest people get the cheapest rent. Minimum wages: price floor a government regulation that makes it illegal to charge or supply a price lower than a specified level, effects depend on whether it is above or below the equilibrium level.