The figure above illustrates the current market for apartments in Washington, D.C
a. If the local government imposes a price ceiling of $1,500 per month, is there a shortage? If so, how much? If not, why not?
b. If the local government imposes a price ceiling of $900 per month, is there a shortage? If so, how much? If not, why not?
a. There is not a shortage. The equilibrium rent is $1,200 a month. Because the rent ceiling is above the equilibrium rent, it has no effect.
b. There is a shortage. At a rent of $900 per month, the quantity of units demanded is 100,000 and the quantity of units supplied is 60,000. Hence there is a shortage of 40,000 units.
You might also like to view...
Figure 3-8
In , if the initial demand and supply for soybeans were D1 and S1, how would a decrease in the cost of producing soybeans affect the market for soybeans?
a.
Demand would increase to D2, price would increase to P2, and the quantity would increase to S.
b.
Supply would increase to S2, price would decrease to P0, and the quantity would increase to S.
c.
Both demand and supply would increase so the price would remain at P1, but the quantity would increase to T.
d.
None of the above would occur.
Which of the following institutions does not provide checkable-deposit services to the general public?
A. Commercial banks B. Savings and loan associations C. U.S. Treasury D. Credit unions