Sam Carlow

Course:  Principles of Micro Economics, ECON 100
Professor: Dr. Christopher Akujuobi
Assignment Title:  Economic Analysis of the U.S. Housing Market

Assignment Details

In this assignment the goal was to understand how stakeholders interact within the market and how different policies, such as price controls, influence market outcomes.  We were also supposed to accurately calculate inefficiencies and surpluses and identify the features-both positive and negative-of the given housing market. In this certain market there were three parties: Consumers, Firms, and the Government. One action in this market that largely impacted all parties was the governmental formation of a price ceiling. This lies below the equilibrium setting a maximum intended to keep prices affordable. The impact the ceiling created was a benefit to the consumers and damage to firms: as the rent for housing became cheaper allowing more consumers to buy houses cheaper and Firms having to sell the homes for less. More specifically, the intervention of the government applying a price ceiling caused a series of events: firms lose producer surplus, consumers looking for and apartment lose, governments lose as they have less property tax revenue, society lost with deadweight loss, government lose housing vouchers, consumer gains cheaper apartments. Overall, the project aimed to provide a comprehensive understanding of the dynamics within the housing market, highlighting the trade-offs and consequences of interactions. This approach allowed me to evaluate both the intended benefits and unintended costs associated with policy measures like price ceilings.

Application

From completing the Micro-Economics Signature Assignment I can apply the analytical skills I developed to better understand and evaluate economic policies related to housing and other markets. For example, when considering policies like rent control or housing subsidies, I will be able to assess their potential benefits and drawbacks more critically, such as how they might impact housing availability, market efficiency, and overall welfare. This understanding furthers as it will also help me recognize the complexities involved in government interventions within a market. Whether I decide to continue my education in Economics or not, these skills enable me to make more informed decisions and contribute to discussions on market behavior and how outside intervention impacts a market. Furthermore, this process has improved my problem-solving abilities, which I can apply to analyze similar economic scenarios or policies in other areas, ensuring I approach them with a balanced perspective and a deeper understanding of their potential impacts.

Results/Conclusions

From this assignment, I learned about how various interactions—whether from the government, businesses, or communities—can influence a market. Specifically, I gained a deeper understanding of the impact of governmental interventions. For example, government actions such as implementing price ceilings or increasing welfare payments can lead to unintended consequences like deadweight loss, increased search costs, black markets, shortages, and disruptions in market equilibrium. Through this process, I realized that there are many reasons why certain market outcomes occur, and it’s important to look beyond the surface to understand the root causes of inefficiencies or surpluses. I also learned the importance of maintaining an open mind, avoiding personal biases, and critically analyzing data rather than jumping to conclusions. Overall, this assignment helped me develop a more nuanced perception of how market interactions and government policies shape economic outcomes.

Challenges and Successes

In the assignment the market included numerous factors impacting the housing market. With the multiple factors I was originally struggling with correctly naming impacts the factors had on the market such as surplus, dead weight loss, search cost, black market, shortage, price ceilings, and price floors. With the copious number of outcomes from factories, the government, or consumers, made it challenging discern the true impact. However, through this confusion I reviewed these topics, solidifying my comprehension allowing me to persevere and complete the assignment. From this process I am most proud of myself for allotting my time and effort into understanding these concepts rather than taking an easy route to rush an submit.