You have been given the following information about the housing market for two-bedroom rental units in Vancouver:

Rent ($ per month)

Quantity Demanded(per month)

Quantity Supplied (per month)

1,100

20,000

0

1,200

15,000

5,000

1,300

10,000

10,000

1,400

5,000

15,000

1,500

2,500

20,000

1,600

1,500

25,000

a.Draw a supply and demand graph to illustrate the housing market above.

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b.What is the equilibrium rental price and the equilibrium quantity of housing?

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c.Suppose that a price ceiling of $1,200 rent per month is imposed in the Vancouver housing market, what will be the effect of this on housing market in Vancouver?

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d.Suppose that a price floor of $1,100 rent per month is imposed in the Vancouver housing market, what will be the effect of this on housing market in Vancouver?

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e.Suppose that the government imposed a tax of $1000on homeowners, who will pay this tax? show and explain in graph (in part a, above)

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f.Suppose that the government imposed a tax of $1000 on homeowners, show and explain the effect on consumer surplus, producer surplus, Dead Weight Loss, government revenue and market efficiency.

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g.Why would the city of Vancouver impose rent controls?

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h.Who are rent controls meant to help? Does it help those people that it is intended to help?

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i.Do you agree or disagree with the use of government-imposed rent controls?Explain(Your opinion)

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j.How government can intervene in free market? Write only government entry/interventions strategies.

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