Suppose that the city council of Launceston decides to regulate rents in order to reduce student living expenses. The average annual market-clearing rent for a two-bedroom house has been $250 per week and that rent is expected to increase to $300 within a year. The city council limits rents to their current $250 per week level.

a)Draw a supply and demand graph to illustrate what will happen to the rental price of a house after the imposition of rent controls. [15 marks]

b)Do you think this policy will benefit all students? Explain your answer. [15 marks]