Question-2 Suppose that the demand and supply schedules for rental apartments are as given in the table below.

Monthly Rent / Demand for the apartments / Supply of the apartments

$2,500 10,000 15,000

$2,000 12,500 12,500

$1,500 15,000 10,000

$1,000 17,500 7,500

$500 20,000 5,000

Using the graph, answer the following questions:

a) What is the market equilibrium rental price per month and the market equilibrium number of apartments demanded and supplied (5 Points)?

b) If the government imposes a rent-control that sets the maximum monthly rent at $1,500, will there be a surplus or a shortage? How many units will actually be rented each month (10 Points)?

c) Suppose that a government declares that the minimum allowable rent is $2,500 per month. If the government can enforce that price floor, will there be a surplus or a shortage? How many units will actually be rented each month (10 Points)?