Concepts: Rent control, price ceiling, shortage
Background: Sacred Games was shot in Mumbai, and several scenes show different views of the city. For several decades after 1947, existing rents were frozen. In 1999, the Maharashtra Rent Control Act was passed, allowing landlords to increase rent by 4% per year. Rent remained extremely low compared to market value. Sacred games exposes some of Mumbai’s slums.
Question 1: Is rent control an example of a price ceiling or price floor? Explain the concepts. What are the unintended consequences of rent control that you may have noticed in Sacred Games? Are these similar to the ones predicted by economic theory?
Question 2: Use the supply and demand analysis to explain how rent control led to a shortage of dwelling units, which in turn resulted in the growing number of slums. Research population growth in Mumbai and discuss its impact on the shortage issue.
Concepts: Price ceiling, shortage, price elasticity
Background: Player 111, a doctor, agreed to remove transplant organs from deceased players so that staff members could sell them on the black market. As in many other countries, selling transplant organs is illegal in South Korea. Instead, organs are typically donated by live donors when possible or by families after a relative passed away. Such a prohibition is equivalent to a price ceiling of 0 won on human organs. In 2019, there were 32,560 potential organ recipients on Korean waiting lists. Of these, only 1,612 patients received an organ donation.
Question: Using a supply and demand diagram, describe the effects of a price ceiling on the market for human organs available for transplant. Is the demand curve perfectly inelastic? Analyze the effects of legalizing the purchase and sale of human organs. Include ethical considerations into your analysis.