Limiting the level of the rent is a [Select (1)] regulation. In the figure, a rent set to not exceed [Select (2)] would be a binding rent control. It would cause [Select (3)] in the rental market, since [Select (4)] rental properties would be offered while [Select (5)] would be demanded. Under binding rent controls, the renters surplus would be equal to the area(s) [Select (6)] while the landlords surplus would be equal to the area(s) [Select (7)] . Going from a scenario without any rent control to one with such control, the change in surplus for the renters would be area(s) [Select (8)] and for the landlords it would be area(s) [Select (9)] , with an overall change in welfare equal to the area(s) [Select (10)] . (1) (a) price ceiling (b) price floor (c) cap and trade (2) (a) r1 (b) r2 (c) r3 (d) none of the options (3) (a) excess supply (surplus) (b) excess demand (shortage) (c) equilibrium (4) (a)q1 (b)q2 (c)q3 (d) none of the options (5) (a)q1 (b)q2 (c)q3 (d) none of the options
Limiting the level of the rent is a [Select (1)] regulation. In the figure, a rent set to not exceed [Select (2)] would be a binding rent control. It would cause [Select (3)] in the rental market, since [Select (4)] rental properties would be offered while [Select (5)] would be demanded. Under binding rent controls, the renters surplus would be equal to the area(s) [Select (6)] while the landlords surplus would be equal to the area(s) [Select (7)] . Going from a scenario without any rent control to one with such control, the change in surplus for the renters would be area(s) [Select (8)] and for the landlords it would be area(s) [Select (9)] , with an overall change in welfare equal to the area(s) [Select (10)] .
(1) (a)
(2) (a) r1 (b) r2 (c) r3 (d) none of the options
(3) (a)
(4) (a)q1 (b)q2 (c)q3 (d) none of the options
(5) (a)q1 (b)q2 (c)q3 (d) none of the options
(6) (a) A (b) A+B (c) C (d) C+D (e) none of the options
(7) (a) A (b) A+B (c) C (d) C+D (e) none of the options
(8) (a) +C (b) +C-F (c) -F-G (d) none of the options
(9) (a) +B (b) -D (c) -C-G (d) none of the options
(10) (a) -F-G (b) -A-B-F (c) -H (d) -L (e) none of the options
Note: When answering the questions about the change in surplus/welfare, a +sign implies a gain in surplus whereas a - sign implies a loss in surplus
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