Microeconomics | Costs and Benefits | Assignment

Running head: MICROECONOMICS
MICROECONOMICS
Name of student:
Name of University:
Author Note:

MICROECONOMICS1
Table of Contents
Answer to Question: 1.....................................................................................................................2
Answer A.....................................................................................................................................2
Answer B.....................................................................................................................................3
Answer C.....................................................................................................................................3
Answer to Question: 2.....................................................................................................................5
Answer A.....................................................................................................................................5
Answer B.....................................................................................................................................6
Answer C.....................................................................................................................................7
Answer D.....................................................................................................................................8
Answer to Question: 3.....................................................................................................................9
Answer A.....................................................................................................................................9
Answer B...................................................................................................................................10
Answer C...................................................................................................................................11
Answer D...................................................................................................................................11
Reference List................................................................................................................................12

MICROECONOMICS2
Answer to Question: 1
Answer A
Figure 1: Housing market with non-binding rent control
Source: (as created by the author)
When price ceilings are imposed above equilibrium it is known as binding rent control. It is
ineffective as equilibrium price increases from Pa to Pnc there is no change in quantity as
quantity supplied is more than quantity demanded.

MICROECONOMICS3
Answer B
Figure 2: Housing market with binding rent control or price ceiling
Source: (as created by the author)
Previously the equilibrium price and quantity was Pa and Qa respectively. After the imposition
of binding price ceiling, equilibrium price reduced to Pc which led to a shortage as quantity
demanded Qd exceeded the quantity supplied Qs. People who gets the house at low price are
benefitted but the excess demand will be disadvantageous to those who are unable to get the
house due to supply shortage (Paciorek).
Answer C
If immigration of the country lowers the population there is no guarantee of the degree of
shortage that can be lowered. The balance of shortage is based on amount of population moved