Economics

5. The Dutch city of Amsterdam has had effective rent control since the Second World War, Despite its considerable charm, Amsterdam has many decaying and burned-out buildings, This is surprising, since everyone agrees that there is a severe housing shortage in Amsterdam. Connie is a women who lives in a rent-controlled apartment building facing a canal. A few years ago Connie paid a plumber to install a shower in her apartment after years of futile requests to her landlord for a shower, If she leaves the apartment (which she is unlikely to do), she expects to charge the incoming tenant for the shower, What is meant by a shortage" of housing? Can you illustrate a shortage situation on a supply and demand graph? Using supply-demand analysis, can you give a plausible reason why Connie's landlord would be so unresponsive to her requests for a shower? Why didn't Connie just get mad and move rather than paying for the shower herself? Can supply, demand, and price analysis help to explain why there are a number of decaying and burned-out buildings in Amsterdam? 6. Suppose you run a lawn mowing business: you charge $1 5 per lawn and you can mow five lawns in an eight hour day, You currently have more ple asking you to mow their lawns than you can satisfy so you are considering hiring someone to help. Your other option is to buy or rent a riding lawn mower that will enable you to mow seven lawns each day! You find that your friend Jim, a good worker, will work for $8 per hour of you can rent a riding mower for $100 per week plus $25 for gas and oil. You estimate that you can sign up an additional 25 customers. . Should you hire Jim or rent the mower and do the work yourself? Which would be more profitable? . What if the mower enabled you to mow eight lawns per day, would your decision be the same