Let's say you are a city council member and therefore policy maker in Hanover, NH where there is a huge shortgage of housing. The counsel is trying to decide how to create more affordable housing for students and year-long residents. With soaring rents, students are often forced to share rooms and adults often have housemates. One solution being suggested is to cap rent rates.

1. Would you go along with the suggestion to cap rent rates? Why or why not?

2. If rents were capped, what would be the economic impact to the quality and availability of housing? Why? (show this graphically)

3. Why do you think some municipalities impost rent controls, even against most economists advise?

4. What solutions would you suggest to the council to increase affordable housing, if not rent controls?