The figure below depicts the market for apartments. Label the diagram appropriately with the labels to the right Rent(per month)Market rent = $1,500Rent control = $1,000100120140160 180Quantity(one-bedroomapartments)ABDemand in thelong runDemand in theshort runSupply in thelong runSupply in theshort runTatelyLong-runshortageShort-runshortage

Answered: Rent (per month) Market rent = $1,500-…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

The figure below depicts the market for apartments. Label the diagram appropriately with the labels to the right

Rent
(per month)
Market rent = $1,500
Rent control = $1,000
100
120
140
160 180
Quantity
(one-bedroom
apartments)
A
B
Demand in the
long run
Demand in the
short run
Supply in the
long run
Supply in the
short run
Tately
Long-run
shortage
Short-run
shortage

Expert Solution

Step 1

Price ceiling:

A price ceiling is a govt-imposed barrier on the competitive price level of the economy. When govt thinks that the competitive market-clearing price is too high and buyers are getting exploited, it steps in and imposes a ceiling below the equilibrium level. Producers are prevented from charging higher prices than this ceiling.

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