Assume that the City Council in Prescott, AZ is considering implementing price ceilings on rental units based on the number of bedrooms in the unit. The demand function for rental units (on a single bedroom equivalent basis) is given by QD = 120 – 4P and the supply function is given by QS = 2P, where P is price and Q is quantity. The Council is giving consideration to imposing a ceiling price on rental units of Pmax = 16.
Next, find 2 recent scholarly articles concerning proposals to increase the minimum wage in the U.S. Using a supply, demand and, in this case, price floor analysis similar to what you did for the rental unit price ceiling, write a 2 page analysis, based on sound economic principles, of the proposal.
Note: To create supply and demand curves, solve for equilibrium and discuss what happens if a regulated price is set that is not equal to the equilibrium price. You might find the following websites to be helpful for this assignment:
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