Question 3

3. Effects of rent control Rent controls require that landlords set apartment prices below the equilibrium price level. An immediate effect is an apartment rental shortage ( excess demand for apartments), because at the regulated price the quantity of apartments demanded is greater than the quantity supplied. When landlords are prevented by cities from charging market rents, which of the following listed outcomes are common in the long run? Check all that apply. O Nonprice methods of rationing emerge. The quantity of available rental housing units falls. The future supply of rental housing units increases. O The quality of rental housing units falls.5. Calculating tax incidence Suppose that the local government of Corpus Christi decides to institute a tax on cider producers. Before the tax, 25 million cases of cider were sold every month at a price of $10 per case. After the tax, 20 million cases of cider are sold every month; consumers pay $15 per case, and producers receive $7 per case (after paying the tax). The amount of the tax on a case of cider is $ per case. Of this amount, the burden that falls on consumers is |$ per case, and the burden that falls on producers is $ per case. True or False: The effect of the tax on the quantity sold would have been smaller if the tax had been levied on consumers. O True O False2. Price controls in the Michigan blueberry market The following graph shows the annual market for Michigan blueberries, which are sold in units of 50-pound boxes. Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph. Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly. Graph Input Tool (? 50 Market for Michigan Blueberries Price 15 Supply ( Dollars per box) Quantity 800 Quantity Supplied Demanded (Millions of boxes) 336 (Millions of boxes) PRICE (Dollars per box) Demand O 0 80 160 240 320 400 480 560 640 720 800 QUANTITY (Millions of boxes) In this market, the equilibrium price is |$ per box, and the equilibrium quantity of blueberries is | million boxes.For each of the prices listed in the following table, determine the quantity of blueberries demanded, the quantity of blueberries supplied, and the direction of pressure exerted on prices in the absence of any price controls. Price Quantity Demanded Quantity Supplied (Dollars per box) (Millions of boxes) (Millions of boxes) Pressure on Prices 35 15 True or False: A price ceiling below $25 per box is not a binding price ceiling in this market. True O False Because it takes six to eight years before newly planted blueberry plants reach full production, the supply curve in the short run is almost vertical. In the long run, farmers can decide whether to plant blueberries on their land, to plant something else, or to sell their land altogether. Therefore, the long-run supply of blueberries is much more price sensitive than the short-run supply of blueberries. Assuming that the long-run demand for blueberries is the same as the short-run demand, you would expect a binding price ceiling to result in a that is in the long run than in the short run