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Why does rent control result in a shortage of rental units. How does price elasticity of demand affect how much of a tax is passed on to the consumer and how much is absorbed by the seller. Show the...

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Why does rent control result in a shortage of rental units.
How does price elasticity of demand affect how much of a tax is passed on to the consumer and how much is absorbed by the seller. Show the effect with graphs.
Why can monopolistic firms make economic profit in the short run bot not in the long run. Explain and show graphically.
Your brother-in-law wants to borrow $1000 from you but he has a fit when you tell him he will have to pay you the same interest on the loan that the bank gives you. Are you justified? Why or Why not?
During the 1930s Jewish fighters dominated boxing. From the around 1975 until the present, blacks have dominated basketball. Explain the cause(s) underlying these two situations.
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Why does rent control result in a shortage of rental units. How does price elasticity of demand affect how much of a tax is passed on to the consumer and how much is absorbed by the seller. Show the effect with graphs. Why can monopolistic firms make economic profit in the short run bot not in the long run. Explain and show graphically. Your brother-in-law wants to borrow $1000 from you but he has a fit when you tell him he will have to pay you the same interest on the loan that the bank gives you. Are you justified? Why or Why not? During the 1930s Jewish fighters dominated boxing. From the around 1975 until the present, blacks have dominated basketball. Explain the cause(s) underlying these two situations.

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Answered Same Day Dec 23, 2021

Solution

David answered on Dec 23 2021
134 Votes
1. Why does rent control result in a shortage of rental units.
Answer:
A government will control rent when it thinks
ealizes that the cu
ent equili
ium rent is very high and it does so by putting cap on the amount of rent that can be charged-known as rent ceiling. The rent ceiling is usually done at a rent which is below to equili
ium rent. So at the ceiled rent, quantity demanded of housing exceeds quantity supplied of housing, resulting in shortage of rental units. This can be verified by the figure1 below, where equili
ium rent is r* (defined by intersection of demand curve with supply curve) and ceiled rent is r” (
*). At the ceiled rate we note that quantity demanded is Qd” but quantity supplied is less at Qs”. So there is shortage of (Qd”-Qs”).
Figure1:
2. How does price elasticity of demand affect how much of a tax is passed on to the consumer and how much is abso
ed by the seller. Show the effect with graphs.
Answer:
The tax that is passed on to the consumer is called buyer’s burden and the tax that is passed on to the producer is called seller’s burden. The relationship between buyer’s burden, seller’s burden, elasticity of demand and elasticity of supply can be represented by following ratios;
(Buyer’s burden/seller’s burden) = (elasticity of supply/elasticity of demand)
This implies that buyer’ burden is inversely related with elasticity of demand whereas seller’s burden is directly related with elasticity of demand.
Burden of tax...
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