**Rental Housing Market Analysis**The diagram in the image represents the rental housing market, illustrating both supply and demand curves. - **Axes:** - The vertical axis (Price) ranges from $750 to $2,250. - The horizontal axis (Quantity) ranges from 0 to 6,000 housing units.- **Curves:** - The **Demand Curve (D)** is downward sloping from point G at $2,250 to point B at $750. - The **Supply Curve (S)** is upward sloping from point B at $750 to point G at $2,250. - The **Equilibrium Point (E)** is where supply equals demand at a price of $1,500 with a quantity of 4,000 units.- **Price Ceiling:** - A horizontal line marked as "Price Ceiling" is set at $750.**Analysis Question:**In the market for rental housing, given the government-imposed price ceiling at $750, which scenario would be true?**Select one:**- a. There will be a shortage of 4,000 housing units.- b. There will be a shortage of 2,000 housing units.- c. There will be neither a shortage nor a surplus because the Price Ceiling will be non-binding.- d. There will be a surplus of 2,000 housing units.**Explanation:**The price ceiling of $750 is below the equilibrium price of $1,500. At this price ceiling:- The quantity demanded (where the ceiling intersects the demand curve) is 6,000 units.- The quantity supplied (where the ceiling intersects the supply curve) is 2,000 units.Therefore, option **a** (a shortage of 4,000 housing units) is correct, as the difference between quantity demanded and quantity supplied is 4,000 units (6,000 - 2,000 = 4,000).

Rental Housing Price Market $2,250 $1,500 Price A Ceiling B $750 D 2,000 4,000 6,000 Quantity (Q) In the market for rental housing shown in the diagram above, the government has imposed a Price Ceiling at $750. Which of the followin would be true? Select one: а. There will be a shortage of 4,000 housing units. b. There will be a shortage of 2,000 housing units. С. There will be neither a shortage nor a surplus because the Price Ceiling will be non-binding. d. There will be a surplus of 2,000 housing units.

Rental Housing Price Market $2,250 $1,500 Price A Ceiling B $750 D 2,000 4,000 6,000 Quantity (Q) In the market for rental housing shown in the diagram above, the government has imposed a Price Ceiling at $750. Which of the followin would be true? Select one: а. There will be a shortage of 4,000 housing units. b. There will be a shortage of 2,000 housing units. С. There will be neither a shortage nor a surplus because the Price Ceiling will be non-binding. d. There will be a surplus of 2,000 housing units.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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