PART 2: Price Ceiling Suppose the following table represents the monthly apartment market in a New York City neighborhood. Apartment Market (monthly) Graph of Apartment Market Rent Qd Qs Surplus Shortage $20,000 0 40,000 $15,000 10,000 30,000 $10,000 20,000 20,000 $5,000 30,000 10,000 So 40,000 0 Video Application: Source - https://www.youtube.com/watch?v=ROh8kfA4i_A The intended and unintended consequences of a price ceiling. Price Ceiling -- Rent Control Example from John Stossel Using the Apartment Market data: 1. Under the Surplus column, for each respective price, calculate the Surplus (if there is not a surplus please write the number "O". Under the Shortage column, for each respective price, calculate the Shortage (if there is not a shortage please write the number "O". 3. What is the Pe and Qe in the apartment market? 4. Please graph the Supply of Apartments and Demand for Apartments. Scale: P-axis is $5,000 per tick mark, Q-axis is 10,000 apartments per tick mark. Suppose that politicians pass rent control legislation of $5,000 in this market. A landlord cannot legally charge over $5,000 for an apartment unit. According to the politician, what is the intended effect of rent control? Describe at least 3 possible unintended consequences of rent control. Compare how many apartments are rented with no rent control legislation versus how many apartments are rented after the legislation. SUMMARY: When the price ceiling is set below the market equilibrium price, a surplus or shortage of apartments may result