Share
Explore BrainMass

effect of an increase in the property tax rate

A major step toward mastering the economic way of thinking is learning to reason in terms of supply and demand. I have listed several questions below to answer and practice these concepts.
What effect would you predict on the price of rental housing in an area where several major employers have recently closed down or moved away? Would you expect the effect to be large or small and why?
What effect would you expect an increase in the property tax rate to have on residential rents? Would you expect the effect to be different in the long run from what it is in the short run?

Solution Preview

For these problems you need to envision a graph with a downward sloping demand curve and an upward sloping supply curve. Price is on the y axis and quantity on the x. When an event affects the underlying costs of a product to the seller, the supply curve shifts. If an event affects the willingness or interest of buyers, it will shift the demand curve.

The first question deals with demand. When there are fewer jobs in an area, there will be fewer people interested in ...

$2.19