Consider the market for rental housing in Yourtown. The demand and supply schedules for rental housing are
Question:
Consider the market for rental housing in Yourtown. The demand and supply schedules for rental housing are given in the table.
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b. Now suppose the government in Yourtown decides to impose a ceiling on the monthly rental price.
What is the highest level at which such a ceiling could be set in order to have any effect on the market? Explain your answer.
c. Suppose the maximum rental price is set equal to $500 per month. Describe the effect on quantity demanded, supplied, and exchanged in the rental-housing market.
d. Suppose a black market develops in the presence of the rent controls in part (c). What is the black-market price that would exist if all of the quantity supplied were sold on the black market?
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a Thefreemarket equilibrium is where quantity demanded equals quantity suppliedFrom t...View the full answer
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