Answer to Question #286143 in Microeconomics for Hannah

Question

Suppose you are a manager of a County government project that is meant to provide rent-regulated housing units in low-income settlements. Using your knowledge of equilibrium, advice the Governor whether this policy will be a success.

Answer 1

It is actually a very good idea to provide housing for low-income citizens. You can even provide for rent with subsequent purchase option. In this case, citizens will strive to pay rent and monitor this housing, since in the future it will be transferred into ownership. In addition, the budget will receive permanent income in the form of rent.