Class summary 12/2

Recall the rent control.
Since there are now 4000 more demanders, there are gonna be other ways to ration the houses.
If the supply curve is flatter, it will cause more shortage of houses because landlords are so sensitive to the change of price that they are not incentivized to provide houses when the rent is regulated at a lower price. This will also make demanders harder to get the houses, they have to bear more real trade-offs to get the houses.

If the demand curve is flatter (demanders are sensitive to the price so they will want to buy more when the rent fee is artificially lower.) There will be more shortage of houses and worse still, people are not willing to bear a larger trade-off to get the houses.

There is a better to help the poor: give them wage subsidy.
This will not impair the market and people are free to use the money: not all of them will spend all the money in the houses, they may value other things more. So the clothes factories, for instance, may get profit and since now the house demand is really higher in a free market, it gives incentive to landlords to provide more houses with high quality.

Price floor:
What determines wage? Worker's own productivity and the market's value on his work
When there is a binding price floor, like minimum wage law, the quantity demanded (firm employment) will decrease and the quantity supplied (people who want a job) will increase, and thus a surplus is created.