while crime rates have fallen across the country over the past few years, they h

Question

while crime rates have fallen across the country over the past few years, they have fallen especially rapidly in manhattan. at the same time, there are some neighborhoods in the new york metropolitan area in which the crime rate has remained constant. using supply and demand diagrams for rental housing, explain how a falling crime rate in manhattan could make the residents in other neighborhoods worse off. (hint: as people from around the country move to manhattan, what happens to rents there? if people cannot afford to pay higher rent in manhattan, what might they do?)

Explanation / Answer

As crime falls in Manhattan the demand for housing in that region goes up. As demand goes up so does price, therefore the old residents who could not afford the housing there will create a larger demand for housing outside of Manhattan, causing price to go up in the other neighborhoods.

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