Agenda

• Equilibrium
• Case1 :
  • Technology Improvement
  • Demand Does not remain constant
• Case2:
  • Price Ceiling
  • Rent Controls
  • Why Rents
  • Remedies

Case1: Technology Improves

• Supply curve will shift rightwards
• There will be change in price and equilibrium quantity
• With demand not being constant, demand curve will also shift and price and equilibrium quantity will change

• Parallel shift in demand curve is due to increase in the number of customers purchasing the product

Example

Case 2:

• Price ceiling
  • It is the maximum price fixed by the government to support the consumers below the market equilibrium
• Rent Control
  • Rent (Price, Fee, Cost)
  • A renter or tenant is a person who pays the rent
  • A landlord is the owner of the property or space provided to a renter
  • People go on rent because they cant afford or because of the job (regular transfers)
  • Because of education (Hostel charges)
  • Landlords are unwilling to provide accommodation, and on the contrary consumers / tenants are happy with the new rent
• Remedies
  • Institutions are required like YMCA (Young men’s Christiaan accommodation)
  • Hostel accommodations in universities for students and faculties
  • Cheap government housing schemes

Agenda

• Price Floor
  • What is meant by price floor
• Case: Wheat Farmers
  • What are the wheat related products
  • What can be a substitute to wheat
  • Will the farmers be happy with the price floor
  • How would the consumers of wheat respond to the price change
  • What will the Government do with the surplus