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Seinfeld Economics: The Apartment (Rent Control)

by Linda Ghent

price ceiling is a government-imposed limit on the price charged for a product. If the price ceiling is set below the market equilibrium price, a shortage will occur. This leads to a rationing problem.

A rationing mechanism is a system for choosing who gets how many goods during a shortage. Long lines are often used to ration goods in shortage (so the good is distributed on a first-come, first-serve basis). In addition, black markets often develop as a way of rationing goods that are in shortage.

Seinfeld: The Apartment (Rent Control)

Jerry lives in a rent controlled building. The only time an apartment opens up is when Mrs. Hudwalker dies, because rent controls create immobility. Elaine and Jerry find out about the opening, and because Elaine happens to be first in line, she gets it for $400 per month. Subsequently, Jerry gets worried about having Elaine living so close, and tells Elaine that she can't have the apartment--the super was offered a $5,000 bribe.

from Seinfeld, Season 2 (1991)
Creator: Larry David & Jerry Seinfeld
Posted by Linda Ghent