Analyzing Occupancy Rates

As you can see from the article in the prior problem, \"Rents Hit All-Time Highs amid Job Growth and Low vacancy Rates,\" some people move out as a result of rent increases, while others are ready to pal.r an even higher rent. Rent control adds yet another aspect by setting a ceiling on what the rental price can ultimatelyr rise to. The supply and demand model can be used to illustrate the mechanism that leads to all these different market outcomes. Consider the market for rental properties in the Inland Empire in Southern California. Suppose that while employment increased by 22% in the Inland Empire, the average rent has increased by 20%. (Assume for a moment that there are no rent control regulations.) Adjust the following graph to illustrate the rent increase by either using the black polht (cross symbol) or by shlltlng the supply and demnd curves. Adjust the following graph to illustrate the rent increase by either using the black point (cross symbol) or by shifting the supply an The Market for Rental Properties in the Inland Empire 4000 O 3600 Supply Demand 3200 2800 2400 Supply RENTAL PRICE (Dollars per month) 2000 1600 New Rent 1200 Demand 800 Vacancies Demanded with Price Control 400 0 100 200 300 400 500 600 700 800 900 1000 Vacancies Supplied with Price Control QUANTITY (Number of vacant units)As a result of the 20% rent increase, the number of vacant units demanded 'V to :l units. Adjust the previous graph to show the effect of the inn-ease in jobs. The increase in jobs results in a new equilibrium rent ef per monn and a new equilibrium number of vacancies of: units. Now suppose that the state of California introduces rent control by setting the maximum rent at $2,400 per month. On the previous graph, use the grey point (star symbol) to indicate the number of vacancies demanded. Then use the tan point (dash symbol) to indicate the number of vacancies supplied. As a result of rent control, there is a V of: vacant units in the market