Problem:

Assume that the City Council in Prescott, AZ is considering implementing price ceilings on rental units based on the number of bedrooms in the unit. The demand function for rental units (on a single bedroom equivalent basis) is given by Q_D = 120 4P and the supply function is given by Q_S = 2P, where P is price and Q is quantity. The Council is giving consideration to imposing a ceiling price on rental units of P_max = 16.

Question:

Could you please explain what they mean by Pmax = 16

Also could you please explain what schedules should be use...or let me know if I am on the right track with the following schedule:

Price Demand Supply

120 236 240

130 246 260

140 256 280

150 266 300

160 276 320