1. You have been given the following information about the housing market for two bedroom rental units in Vancouver:

RentQuantity DemandedQuantity Supplied

(dollars per month)(per month)(per month)

1,10020,0000

1,20015,0005,000

1,30010,00010,000

1,4005,00015,000

1,5002,50020,000

1,6001,50025,000

Hand draw a supply and demand graph to illustrate the housing market above

a) What is the equilibrium rental price? ____________________

b) What is the equilibrium quantity of housing?________________________

2.Now suppose that a price ceiling of $1,200 rent per month is imposed in the Vancouver housing market described above in problem #1.

a) What is the new quantity of housing demanded? __________________

b) What is the quantity of housing that landlords would be willing to supply?____________

c) What is the excess quantity of housing demanded? _______________

3.You are a landlord and historically had received $1,600 per month for your two bedroom rental, but now that rent control has been imposed by the government, the maximum rent that you could collect from tenants would be $1,200.

a. Would you want to invest money into fixing up or maintaining your rental property? Why or why not?

b. In the long term, what will happen to the quality and quantity of housing in Vancouver if this rent control is imposed?

c. Why would the city of Vancouver impose rent controls? Who are rent controls meant to help? Does it help those people that it is intended to help?

d. Do you agree or disagree with the use of government imposed rent controls?Explain(Your opinion)

4.In each of the following, compare the price elasticity of demand for each pair of goods. Explain why the demand for one of the goods is more elastic than the other:

a. ) A flat screen TVversus an ipod.

b. ) Electricity just after an increase in its price versus electricity two years after the price increase.

c. ) Acetominophen versus Tylenol brand acetaminophen

d. ) Ipads when they first were produced versus Ipads two years from now.