2. Market Effects of Transfers
Consider the market impacts of housing assistance programs. Suppose the government introduces a new
housing voucher program to all renters.
(a) in a market with perfecty inelastic supply, who benefits from this policy? Illustrate graphically and
explain
(b) in a market with perectly elastic supply, who benefits from this policy? Illustrate graphically and explain
• Now suppose that the subsidy is only available to low-income renters
(c) are non-low-income renters in the inelastic market paying more, less, or the same as a result of this
policy? Explain
(d) are non-low-income renters in the elastic market paying more, less, or the same as a result of this policy?
Explain