4 THE MARKET (Ch. 1) (a) If subletting is legal--or, at least, practiced-who will sublet to whom in equilibrium?(Assume that people who sublet can evade the city rent control restrictions )E, who is willing to pay only $10 for an apartment would sublet to F who is willing to pay $18 (b)What will be the maximum amount that can be charged for the sublet payment? $18 (c) If you have rent control with unlimited subletting allowed, which of the consumers described above will end up in the 5 apartments? A ( d)How does this compare to the market outcome? It's the same 1.5(2) In the text we argued that a tax on landlords would not passed along to the renters. What would happen if instead the tax was imposed on renters? (a) To answer this question, consider the group of people in Problem 1.1 What is the maximum that they would be willing to pay to the landlord if they each had to pay a S5 tax on apartments to the city? Fill in the box below with these reservation prices Person Reservation Price 35 20 25 5 13 0 (b) Using this information determine the maximum equilibrium price if re are 5 apartments to be rented. $13 (c) Of course, the total price a renter pays consists of his or her rent plus the tax. This amount is $18 (d)How does this compare to what happens if the tax is levied on the landlords? It>s the same4 THE MARKET (Ch. 1) (a) If subletting is legal—or, at least, practiced—who will sublet to whom in equilibrium? (Assume that people who sublet can evade the city rent￾control restrictions.) E, who is willing to pay only $10 for an apartment would sublet to F, who is willing to pay $18. (b) What will be the maximum amount that can be charged for the sublet payment? $18. (c) If you have rent control with unlimited subletting allowed, which of the consumers described above will end up in the 5 apartments? A, B, C, D, F. (d) How does this compare to the market outcome? It’s the same. 1.5 (2) In the text we argued that a tax on landlords would not get passed along to the renters. What would happen if instead the tax was imposed on renters? (a) To answer this question, consider the group of people in Problem 1.1. What is the maximum that they would be willing to pay to the landlord if they each had to pay a $5 tax on apartments to the city? Fill in the box below with these reservation prices. Person A B C D E F G H Reservation Price 35 20 25 30 5 13 10 0 (b) Using this information determine the maximum equilibrium price if there are 5 apartments to be rented. $13. (c) Of course, the total price a renter pays consists of his or her rent plus the tax. This amount is $18. (d) How does this compare to what happens if the tax is levied on the landlords? It’s the same