Assignment - Metropolitan City Housing
Assignment Instructions;
You are given a Microsoft Word file containing six questions testing your critical thinking ability. Answer each question with a short answer essay. When you have completed the answers upload the file to the Microsoft Word file to the Critical Thinking Assignment dropbox.
Your response to questions must be well thought out and fully answered using complete sentences in standard English. A phrase or list is not an adequate answer. Your responses are checked against other sources including other TSU students. Plagiarism will result in a failing score. This assignment must be completed without the assistance of other students or individuals.
Problem: Some members of the city council are concerned that rents are rising much faster than income and some action must be taken to insure citizen can get reasonably priced housing. A proposal is being considered to pass a law lowering the price of rental housing in the city to $1,000. The following diagram has been developed by the city manager to describe the current situation in the city. As an expert on supply and demand you have been asked to answer the following questions.
Fig 1- Metropolitan City Housing Model
1. Describe the current market price and quantity for rental housing in Metropolitan City then explain the single most important problem or issue of concern that is likely to arise in the rental housing market in Metropolitan city if the price of housing units is set a $1,000.
2. As an expert in supply and demand explain what information or facts in Fig 1 you would emphasize to express your concern to government officials about the government's proposed pricing policy for rental housing.
3. If the Metropolitan city sets the price of rental housing at $1,000 explain how the quantity demanded and quantity supplied is changed.
4. Explain the assumptions that are made in analyzing the model of the rental housing markets in Metropolitan City shown in Fig 1 - Metropolitan City Housing Model
5. Describe the inefficiencies , consequences, or limitation from the government's imposition of a $1,000 maximum rent on housing units in Metropolitan City given the assumptions you identified in question 4.
6. Given the consequences and implications of the government's pricing policy with regard to rental housing, what recommendations or conclusions or suggestions would you recommend the Metropolitan City take to insure the most efficient housing market.