-The Table Above Shows the Demand for and Supply of Rental

Essay

-The table above shows the demand for and supply of rental housing in Crainsboro. The city government is considering imposing a rent ceiling of $700 a month. Help the government to analyze the effects of the proposed rent ceiling.
a) Draw the demand and supply curves. With no rent ceiling, what is the rent and how many apartments are rented?
b) With the rent ceiling, what is the rent and how many apartments are rented? What is the shortage of housing? Explain.
c) If the rent ceiling is strictly enforced, what is the maximum price that someone is willing to pay for the last unit of housing available? Is the housing market efficient? Explain.
d) If a black market develops, how high could the black market rent be? Explain your answer.