Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Question 3 (8 points) The income freeze as a result of COVID-19 shows that in a certain EU country renting a house offers relatively little
Question 3 (8 points) The income freeze as a result of COVID-19 shows that in a certain EU country renting a house offers relatively little benefit to people with low incomes. They are in danger of being oppressed. The government uses the following supply and demand function: Q1=-0,5P + 8 Q. = P-2 Without housing subsidy, the demand function would take the following form: Q.=-0,5P+7 At which: Of' = demand for rental housing with subsidy (x 100.000) Qa = demand for rental housing without subsidy (x 100.000) Q, = supply of rental houses (x 100.000) P = rent per month (x 6 100) Each tenant receives the same housing benefit. 3a. Determine the amount of the subsidy per month (1 point). Rent allowance (subsidy) changes tenants' willingness to pay. In addition, the housing benefit appears to unintentionally lead to an increase in the income of landlords. b. Calculate what percentage of the rent allowance per home is beneficial to the landlords (2 points). C. Show by graph, the effect of the housing subsidy (winners and losers = effects on surplusses (5 points)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started