...This essay will critically discuss how price ceilings and floors could possibly lead to economic inefficiency causing surpluses or shortages in relation to graphs and the real world case study. Firstly, price ceilings and price floors are basic aspects of our economy. Government enacted laws used to prevent suppliers from establishing prices of resources higher than supposed to be are known as price ceilings. Price floors are minimum pricing rates that can be charged for a particular good or service. Price controls such as these two are used to maintain affordable lifestyles and to protect consumers from suffering from unfair inflation. But however, if not executed correctly, price controls become completely ineffective. In order for a price ceiling to be effective price ceilings must be set below the natural market equilibrium but this in return becomes a problem the outcome of that would result in either excess in demand or a shortage in supply (Taylor 2006). Producers will not produce as much at a lower pricing rate, while consumers will continue to demand more because of the good being made more affordable; demand will exceed the supply. But still if the demand curve is relatively elastic then the net effect to consumer surplus will be positive. Producers are definitely harmed, as their surplus is doubly hit with a reduction in the number of firms that are willing to take the lower pricing rates. Resulting shortages of goods or services can lead to consumers having to line...
Words: 1492 - Pages: 6
...Capstone Paper: Rent Ceilings in New York City Rent control was introduced in New York City after World War I. “Rent-controlled tenants live in buildings built before 1947 and have lived there continuously since 1971. They tend to be seniors on fixed incomes” (Thorbourne, 2015, para 1). City officials believed that the rapid rise in demand for rental units would drive up rent prices therefore price ceilings were instituted. This created a shortage in supply because it was not profitable for builders to continue construction where rent was regulated. Furthermore, a tenant is legally allowed to stay until they died or the agreement could be passed to a cohabitant that resided there for at least two years (Mceachern, 2014, p. 86). This causes an issue for landlords in the sense that they are not remaining profitable because rent controlled prices are dramatically lower than the free market. Landlords often take extreme measures in trying to catch tenants violating their lease so that they can terminate the binding agreement. By terminating the lease the landlord may not be bound by rent control once the tenant vacates. The below paragraphs will discuss the following questions associated when a price ceiling is imposed below the equilibrium level: 1. What happens to the quantity and quality of housing available? 2. What happens to the quality of housing and why? 3. Who benefits and loses from rent control? 4. How do landlords of rent-controlled apartments try to get tenants...
Words: 1069 - Pages: 5
...1. Some tenants would support rent control laws because they could be making a good amount of money and live in a very cheap apartment. New York city is one of the priciest places to live and people making above average salaries a year would be in favor of renting out these cheap apartments. Not all of the tenants gain from rent control laws because they could be making a low salary every year and not have access to these apartments because wealthier people are occupying them for longer and have no incentive to ever move. 2. A deadweight loss in this situation is caused by the price ceilings imposed by the government, since there is less incentive for people to produce these apartments due to minimized profits from price ceilings, and there is an increasing demand for these cheap apartments a deadweight loss is created. 3. NYC rent control is in place to try and help those with smaller incomes find affordable places to live and below market rents are those rates imposed to help them and these rents are the going rate for apartments under the price ceiling. 4. Rent control increases the consumer surplus in New York city while the producer surplus is lessened. 5. There is less incentive to apartment builders to construct these apartments due to the set amount of profit that they can make. Rent control takes out the aspect of a possible bidding war that a landlord can set between two perspertive tenants. Also the living conditions of the apartments are ignored...
Words: 361 - Pages: 2
...about marketing intervention, which is the price ceiling and price floors. Price ceiling is actually set below the equilibrium price by lowering the price of the goods so that consumers can be able to afford the goods, then price floors which is set above the equilibrium price by increasing the price of some goods in order to protect the interest of some certain producers, and also to see the efficiency and inefficiency of both the price ceiling and price floors. Efficiency which is the economics allocating there resources in a good manner for example government rent control policy and inefficiency, is when the resources are not proper allocated an its example which is the black market and then some graphs that represent the price ceiling and price floors with their explanations and then lastly the real world example of price ceiling and evaluating the effective policy. Price ceiling and price floor are both price controls and also for government to interfere in the free market that changes the market equilibrium price. Price ceiling basically happens when the government puts a legal limits on how high a product price can be and it also disallow prices to exceed a certain maximum that causes shortages in order to be affordable by the consumers, there will be a shortage of goods when ever the price is set below the market price, in this situation demand will be higher or supply will be shortage because consumers will be demanding for more goods due to the cheaper price of the goods...
Words: 1167 - Pages: 5
...Love is the most important thing in this world and Jonathan Larson’s Rent shows us why. Set in the East Village, New York in 1989, Rent is an emotional and inspirational experience that is important for everyone to see. What makes this show so powerful, is how relatable the story is. The script is so close to real life, which may have to do with the fact that the creator, Jonathan Larson, had AIDS while writing the show’s score. It is an extremely hard show to pull off, but the La Mirada Theatre and McCoy and Rigby Entertainment have done a wonderful job both theatrically and technically with this brilliant masterpiece. Richard Israel, the director of the production, has done the show justice. It was staged masterfully and the story was presented...
Words: 747 - Pages: 3
...New York Apartment Price Controls – An Article Review Rent controls began in New York City in November 1943, when rent for all units in the city were frozen at their March 1943 levels as part of the U.S. Emergency Price Act of 1942 (Gyourko & Linneman, 1990). The price controls were altered by Federal Housing and Rent act of 1947, exempting units built after February 1947 from all future controls; New York City continued to price control rent on virtually all apartments constructed prior to 1947 (Gyourko & Linneman, 1990). Only about 1.8% of New Yorkers actually enjoy the securities of rent controlled apartments, 45.4% do live in rent stabilized accommodations where landlords are prohibited from increasing rates by a certain percentage each year (Pittman, 2013). The debate over rent control has been a long controversy; many argue that rent control is far too restrictive and that it makes apartment hunting almost impossible for many (due to the low supply in “affordable apartments”). The price ceilings set in place have been beneficial in terms of making living more affordable, but it also has created other problems. Tenants under controlled rent often stay longer, even it is deemed to be unsuitable for their living situations (ex: expansion in family) simply because it is affordable. Because tenants stay longer, it makes vacancy at certain controlled prices much harder for those who are living in unregulated accommodations (Pittman, 2013). As displayed...
Words: 663 - Pages: 3
...ABSTRACT This paper is intended to provide critical responses to the weaknesses of globalization and corruption in the world that we are currently living based on the mixed economic worldview which is my personal economic worldview which threatens to undermine the stability of economic and political development on both a national and global scale, and which requires both immediate and wide-ranging policy interventions. The recent concern with corruption is attributable, not to any substantive increase in corrupt practices, but rather, to the re-framing of corruption in light of broader shifts and transformations within the global economy. The historical context of globalization covers centuries. This paper reviews the types, forms as well as the consequences of corruption. The paper also reviews the issues associated with globalization and the effect it has on the lives of various individuals. It questions the view that, under certain conditions, corruption may enhance efficiency and argues that though corruption may benefit powerful individuals it will indubitably lead to greater inefficiency and a waste of resources at a macro-economic level. Table of Contents ABSTRACT i INTRODUCTION iii BACKGROUND iv Forms of Corruption vi 1.1 Bribery vi 1.2 Theft and fraud vi 1.3 Embezzlement vi 1.4 Nepotism vi 1.5 Conflict of Interest vi 1.6 Favouritism vii Types of Corruption vii 2.1. Grand corruption vii 2.2 Political corruption vii 2.3 Corporate corruption...
Words: 5314 - Pages: 22
...Case Study: Siemens Bribery Scandal 1. Corruption was deeply embedded in Siemen’s business culture. They rationalized this corruption by stating that it was not illegal to initiate bribes to government officials. This was true, however not anymore, the law changed in 1999 prohibiting such acts of corruption. 2. If a manager at Siemens would have stood up and took a stand against corruption, I think that he/she would have most likely been fired for being insubordinate. The higher executives that were promoting such bribery would have wanted these managers to go along with what they were doing. The manager could have also been demoted possibly, or just plain and simple reamed out by the higher executives. 3. Siemens spent extra money to secure future business investments. This in, in turn, means that other companies, even ones that might have an advantage, lose business opportunities. The entire concept of such corruption completely disregards competition, because it simply removes it, unless other companies also engage in bribery. 4. Some economists argue that doing such practices such as bribery is the price that must be paid to perform a greater good. They support this claim by stating that it can promote efficiency and growth in countries that have pervasive and cumbersome regulations, and may also enhance welfare in countries that have preexisting political structures that distort the workings of the market mechanism. On the other hand other economists...
Words: 426 - Pages: 2
...Corruption is a social disease that entails social justice that plagues many developing countries today. Corruption is just as multifaceted concept as there are societies and economic and political systems that embraces from the broad concept of corruption to the narrow legal concept of bribery. Corruption is the abuse of public office for private gain and the abuse of public power for private benefit. A well known definition of corruption is the one of the World Bank which considers it is the abuse of public office for personal gain. “Corruption has been broadly defined as the misuse of public office for private gain and the abuse of entrusted power” (Vargas-Hernández, 2011, p. 270). This paper will identify the root causes of how corruption starts? Corruption takes place when an individual tries to gain personal gain through an unfair advantage of someone else's condition, status or position. It occurs when a product, accommodation or activity's reality is altered in a manner in which another person is endangered or cheated. Corruption is a symptom of other fundamental causes (Xin & Thomas, 2004, p. 297).Widespread corruption is a symptom of inefficient administration. Corruption starts, firstly, when a country or state allocate scarce benefits to individuals and firms predicated on strict licit criteria, rather than on need. In such cases, bribes clear the licit hurdle. Secondly, Low pay and inadequate monitoring of their performance. In such cases, bribes...
Words: 282 - Pages: 2
...Why a Harvard Professor Has Mixed Feelings When Students Take Jobs in Finance This is a bittersweet time on campus. Seniors are beginning to find jobs, and while their enthusiasm is infectious, some of their choices give me pause. Many of the best students are not going to research cancer, teach and inspire the next generation, or embark on careers in public service. Instead, large numbers are becoming traders, brokers and bankers. At Harvard in 2014, nearly one in five students who took a job went to finance. For economics majors, the number was closer to one in two. I can’t help wondering: Is this the best use of talent? Of course, these are intensely personal choices as young people chase their aspirations and dreams. But if a favorite student of mine comes up to me and says, “I just got an offer at this investment bank and I’m going to take it,” I want to know how should I feel about it. I will be happy for her individually, but still I wonder: Is this a good decision for society as a whole? As an economist, I look at it this way: Every profession produces both private returns — the fruits of labor that a person enjoys — and social returns — those that society enjoys. If I set up a shop on Etsy selling photographs, my private returns may be defined as the revenue I generate. The social returns are the pleasure that my photographs provide to my customers. A scene from “It’s a Wonderful Life” that presents two types of bankers. Mr. Potter, seated, played by Lionel...
Words: 1275 - Pages: 6
... Enterprise Rent-A-Car has been given the opportunity to excel and further dominate its industry. With the continually expanding market and need for this service a window has presented itself for Enterprise. Using information provided and in -depth marketing knowledge a line of action will be provided that will allow Enterprise to reach its goals. Problem Statement In order to continue to grow and prosper while staying true to their corporate culture Enterprise Rent-A-Car needs to focus on recruiting and retaining promising college graduates and optimizing its marketing strategy to gain the most possible advantage. However this must all be achieved in spite of college student’s lack of knowledge and awareness of the opportunities that Enterprise provide, that the rental car market is still rapidly evolving, making it very volatile and prone to changes and the emerging as well as established competition. Environmental Analysis To best organize the environmental analysis the method SWOT will be used. Identifying the strengths, weaknesses, opportunities and threats will give a good understanding the conditions that Enterprise is restricted by. Strengths * Established * Large Market Share * Recognized Brand * Necessity of Service * Strong Reward System * Effective Culture | Weaknesses * Ineffective Advertising * College Graduates Unaware of Opportunities | Opportunities * Growing Market | Threats * Competition | Enterprise Rent-A-Car has a number...
Words: 2657 - Pages: 11
...“Enterprise Rent-A-Car” A Case Study Solution Submitted By: Group ‘B’ (Bimee Maskey, Hrizu Adhikari, Krishna Dahal, Mahesh Bhandari, Sacheet Pandit, Sampada Paudel) Submitted To: Prof. Dr. KD Koirala SOMTU Date: 31st Dec, 2014 Kirtipur Enterprise Rent-A-Car Case Summary: Enterprise Rent-A-Car is founded by Jack Taulor in 1957. It is a Private car rental business with a fleet of more than 850000 vehicles which is based in St Louis, Missouri with services in the US, Canada, Germany, Irelance, Puerto Rico and UK. It is an international car rental company with a multi-billion pound turnover. Enterprise is an extended 'family' of more than 66,000 employees. It is the largest rental car company in North America but has the approach and feel of a small business. The business is synonymous with exceptional customer service. Enterprise Rent-A-Car (EARC) maintains a unique selling proposition in the rental automobile industry, describing its greatest idea as personal service. This proposition is built into every facet of ERAC’s operations from point-to-point car delivery to a 427,000 rental-vehicle fleet. The business has been shaped by various concepts like: treating customers like good friends and neighbors, which has enables ERAC to grow to a point where the automotive operations have annual revenues in the billions, a fleet of cars and trucks with the numerous employees. ERAC became the industry leader in terms of fleet size and market presence with the revenue...
Words: 1891 - Pages: 8
...Customer Service at Enterprise Rent a Car Enterprise Rent-A-Car Company (Enterprise) is a car rental company based in the US. The company is principally engaged in rent-a-car, international operations, fleet services, car sales, rent-a-truck, and enterprise rideshare services. It principally rents vehicles to individual customers, business houses both on short-term and long-term basis, and fleet operators. It also has car-sharing and van pool programs. In addition to its primary services, it offers courtesy car rentals for automotive dealers and body shops. It also is actively engaged in commercial truck rental business and used market business too. It also has presence in the fleet management business, facilitating businesses in managing and expanding their fleets. The company operates with a fleet of 713,000 vehicles in over 5,000 locations across the US and from another 965 locations in Canada, Germany, Ireland, and the UK. Enterprise is headquartered in St. Louis, the US. 1. ------------------------------------------------- 2 Look at all complaints about your service as an opportunity to improve. Aim to resolve any complaint quickly and efficiently. It takes 15 minutes to clean a car. It takes 5 minutes to go over contract. Customer is in the car from a day to a month. A clean car is crucial to satisfying the customers needs. Listen to the customers needs and then try to cater to the needs as best as we can. For example., car type, color, model, size, length...
Words: 267 - Pages: 2
...Individual Case Analysis Enterprise Rent – A – Car Executive Summary Enterprise Rent – A – Car is one of the largest players on the market today. This company has selected a specific target market, in which they have been outperforming all their competitors for many years. Unfortunately, other companies have noticed their success and decided to break into their market to achieve a part of the market share, hence their revenues. In addition, the company holds much weaker marketing strategy which started to set the company behind among their competitors. Their customers sometimes were not aware of their branch locations, and one out of five randomly selected people on the street were not even familiar with the company. On the other hand, the success has been shown throughout their strong culture which holds a mentality of customer, employee than profits – in that particular order. This culture states that customer is the most important in the business, and doing everything for clients is the key of this business model. Second in place would be the employee, hence they are the ones who are helping those customers. Appreciation was shown in large bonuses and higher commission percentages than other companies would offer. Last part of the chain, was the profit. It was believed by the original owner Jack Taylor, that if company will look at out for the first two (customer and employee), revenue will follow which tended to work hence company could outperform many competitors...
Words: 2938 - Pages: 12
...managerial accounting. Virtually all managers need to plan and control their operations and make a variety of decisions. The goal of managerial accounting is to provide the information they need for planning, control, and decision making. If your goal is to be an effective manager, a thorough understanding of managerial accounting is essential. Planning LEARNING OBJECTIVE 2 Describe how budgets are used in planning. Planning is a key activity for all companies. A plan communicates a company's goals to employees aiding coordination of various functions, such as sales and production.A plan also specifies the resources needed to achieve company goals. Budgets for Planning The financial plans prepared by managerial accountants are referred to as budgets. A wide variety of budgets may be prepared. For example, a profit budget indicates planned income, a cash-flow budget indicates planned cash inflows and outflows, and a production budget indicates the planned quantity of production and the expected costs. Consider the production budget for Surge Performance Beverage Company. In the coming year, the company plans to produce 5,000,000 12-ounce bottles. This amount is based on forecasted sales. To produce this volume, the company estimates it will spend $1,500,000 on bottles, $400,000 on ingredients, $150,000 on water, and pay workers at its bottling plant $300,000. It also expects to pay $60,000 for rent, incur $80,000 of depreciation of equipment, and pay $100,000 for...
Words: 2063 - Pages: 9
