Topic: Economic Analysis of price control , need help for g,h,i,j please!! DWL obtained: 108000, CS (original to price ceiling)=(540000 to 738000), PS(original to price ceiling)=(630000 to 324000)

Problem 1. The Economic Analysis of Price Controls (30 marks) The demand and supply for rental apartments in a city are given by: D: QP = 2400 - 1.2P S: QS = -600+ 0.8P a) Find the market equilibrium price and the number of the apartments that will be rented at this price and draw the demand and supply diagram. b) Calculate the consumer surplus, producer surplus and total gains from trade in this market and explain what they represent. The city council worries that rents are too high and housing has become unaffordable. They consider introducing a cap on how much rent landlords could charge, equal to $1200. c) How is this type of price control called? Show it on your previous diagram. d) How does this regulation affect the number of apartments that will be rented in this market? e) Without any calculations (yet), who do you think will benefit and who do you think will be hurt by this price control? f) Calculate the new consumer surplus, producer surplus and total surplus in this market after the rent is being capped and compare them to the values from part (b). Do your results confirm your answers from part (d)? g) Is the society overall better off when rents are being capped at $1200? Is there any deadweight loss? If there is a DWL, show it on your graph, calculate it and explain what it represents. h) What do you think will be the effects of this rent control in the long run? Will landlords get used to it or will things get worse? i) If you were an economic advisor for the city, would you advise for or against the rent control? Why or why not? i) Suggest a different measure that the city could use to help low income families with their housing needs