Zac, Todd and Carlos want to leave the college dorms and split the cost of a three bedroom rental home. When they started to look for a single$-$family home, they were highly discouraged because there were no available homes on the market. After doing some research, the three young men discovered there was a price ceiling in their college town for rentals set at $$1200.$ They decided to stay in the dorms for the upcoming semester.  

 

Looking at the graph below, representative of the rental market they live in$,$ think about why these men could not find an available rental.

The sum of which two areas represents the lost social surplus $($deadweight loss$)$ from this price ceiling? Please use the variables from the image in your answer $($and not numeric calculations$).$

Supply and demand curves for the Housing Rental market with a price ceiling.

This supply and demand graph is labeled Market for Rental Housing. On the Y axis is price per rental in USD. On the x axis is quantity per thousand rentals. Demand and supply cross at price equals $$1500$ and quantity equals $100$ thousand $(100,000).$ There is a price ceiling line that runs horizontal from price $$1200$ and touches the supply curve and another line going vertical that meets this point from quantity equals $50$ thousand $(50,000).$ There is a line that runs horizontal from price $$1800$ and touches the demand curve and another line going vertical that meets this point from quantity equals $50$ thousand $(50,000).$

Provide your answer below:

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