Housing policy analysts debate the best way to increase the number of housing units available to low-income households. One strategy—the demand-side strategy—is to provide people with housing vouchers, paid for by the government, that can be used to rent housing supplied by the private market. Another— a supply-side strategy—is to have the government subsidize housing suppliers or to build public housing.
a. Illustrate supply- and demand-side strategies using supply and demand curves. Which results in higher rents?
b.Criticsofhousingvouchers(thedemand-sidestrategy) argue that because the supply of housing to low-income households is limited and does not respond to higher rents, demand vouchers will serve only to drive up rents and make landlords better off. Illustrate their point with supply and demand curves.