Suppose that the demand and supply schedules for rental apartments in the city of Gotham are as given in the following table.

a. What is the market equilibrium rental price per month and the market equilibrium number of apartments demanded and supplied?

b. If the local government can enforce a rent-control law that sets the maximum monthly rent at $1,500, will there be a surplus or a shortage? Of how many units? How many units will actually be rented each month?

c. Suppose that a new government is elected that wants to keep out the poor. It declares that the minimum rent that landlords can charge is $2,500 per month. If the government can enforce that price floor, will there be a surplus or a shortage?
Of how many units? And how many units will actually be rented each month?

d. Suppose that the government wishes to decrease the market equilibrium monthly rent by increasing the supply of housing.
Assuming that demand remains unchanged, how many additional units of housing would the government need to supply to get the market equilibrium rental price to fall to $1,500 per month? To $1,000 per month? To $500 per month?

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Monthly Rent $2,500 2,000 1,500 1,000 500 Apartments Demanded 10,000 12,500 15,000 17,500 20,000 Apartments Supplied 15,000 12,500 10,000 7,500 5,000