Question

Recall this information from the text: “Price ceilings prevent a price from rising above a certain level. When a price ceiling is set below the equilibrium price, the quantity demanded will exceed quantity supplied, and excess demand or shortages will result. Price floors prevent a price from falling below a certain level. When a price floor is set above the equilibrium price, quantity supplied will exceed quantity demanded, and excess supply or surpluses will result. Price floors and price ceilings often lead to unintended consequences.” In this 1-2 page paper, analyze what happens when a higher minimum wage is enacted (raising a price floor on the price of labor). Will the number of workers hired change? Why? What might be an unintended consequence of a higher minimum wage law designed to help low-income workers? Next, analyze what happens when the price of rent is regulated so that prices are kept artificially low (a price ceiling). What will happen to the availability of apartments? Why? What might be an unintended consequence of a rent control wage law designed to help low-income renters?

Answer 1

Yes, The number of worker hired can be changed because of the belowmentioned reasons:-

1. In Tough Compitition market We cannot change the equlibrium price, Due to increase in floor price, therefore to reduce cost and minimise loss workers can be removed.

2. Due to increase in price floor, price ceiling can be above certain limits, it can result into disrupting of demand, therefore to control price ceiling, workers hired can be removed.

If Price of the rent regulated or any law related to this enacted consequances is belowmentioned :-

1. The availability of apartment can be go stringent, because rent is low and affordable to a common man

2. The builders and Landlord can giving home or room on rent because of low rates, which they cacnnot afford, their can be strikes from the builders and landlords.

3. The Person living in the villages can come to the city to do work or seeking to find job, because due to enough saving because low rent.

4. Tax revenue of the goverment can be lower from what was previous, because people show lower rent income due to low rent received.