Question

1) In cities that receive large numbers of migrants, what would happen if governments try to make housing more affordable by enacting price ceilings/rent control? Explain in detail.

2)  Do you think that the countries receiving migrants will use more labor or capital in their agricultural production? Explain your reasoning in detail.

Answer 1

1)

increase in a number of migrants would invariably lead to a rise in demand for rented accommodation. There would most probably be a spike in the rent. If the government introduces rent control, it would make the situation worse.

If rent control or ceiling is below the equilibrium rent, it would create a shortage of accommodation in areas. If it will further give rise to the black market in the region, Corruption and ill practices would be a result of such control. there will not be new construction either. Low profits will demotivate construction firms.

2)

Based on past experiences, we can infer that a larger number of migrants are unskilled or semiskilled. They are not apt for skilled jobs. They provide cheap labor. thus, the supply of unskilled labor is likely to witness signficant rise.

Thus, it would be profitable to engage more labor in agricultural sector. Use of capital will decrease relatively.