Suppose the following graph shows the demand for, and supply of, apartments in New York City. Use the black point (plus symbol) to indicate the equilibrium monthly rent and quantity of apartments in the absence of price controls. Then use the green point (triangle symbol) to fill the area representing consumers' surplus, and use the purple point (diamond symbol) to fill the area representing producers' surplus. MONTHLY 2800 Demand 2600 2400 2200 2000 1800 Supply 0.8 1.6 2.4 3.2 QUANTITY OF APARTMENTS (Millions per month) 4.0 Equilibrium A CS PS Suppose that the government decides to impose a rent control of $2,100 per month on rental apartments in New York City. On the following graph, use the green point (triangle symbol) to shade the area representing consumers' surplus in the presence of rent control. Use the purple point (diamond symbol) to shade the area representing producers' surplus after the rent control. Then use the grey point (star symbol) to shade the area representing deadweight loss resulting from the rent control. MONTHLY RENT (Dollars per apartment) 2800 Demand 2600 2400 2200 Rent Ceiling 2000 Supply 1800 0.8 2.4 3.2 QUANTITY OF APARTMENTS (Millions per month) 4.0 In the presence of the rent control, consumers' surplus per month. The price ceiling on rent causes regions in the graph to see their areas. by CS w/ Rent Control PS w/ Rent Control Deadweight Loss Which of the following are generally true of rent control? Check all that apply. The quantity of available rental apartments increases. Non-price methods of rationing emerge. All consumers gain from rent control. The quality of rental apartments falls. Everyone who needs a place to live can rent an apartment. per month and producers' surplus per month of deadweight loss. Tool tip: Click on the shaded by
Suppose the following graph shows the demand for, and supply of, apartments in New York City. Use the black point (plus symbol) to indicate the equilibrium monthly rent and quantity of apartments in the absence of price controls. Then use the green point (triangle symbol) to fill the area representing consumers' surplus, and use the purple point (diamond symbol) to fill the area representing producers' surplus. MONTHLY 2800 Demand 2600 2400 2200 2000 1800 Supply 0.8 1.6 2.4 3.2 QUANTITY OF APARTMENTS (Millions per month) 4.0 Equilibrium A CS PS Suppose that the government decides to impose a rent control of $2,100 per month on rental apartments in New York City. On the following graph, use the green point (triangle symbol) to shade the area representing consumers' surplus in the presence of rent control. Use the purple point (diamond symbol) to shade the area representing producers' surplus after the rent control. Then use the grey point (star symbol) to shade the area representing deadweight loss resulting from the rent control. MONTHLY RENT (Dollars per apartment) 2800 Demand 2600 2400 2200 Rent Ceiling 2000 Supply 1800 0.8 2.4 3.2 QUANTITY OF APARTMENTS (Millions per month) 4.0 In the presence of the rent control, consumers' surplus per month. The price ceiling on rent causes regions in the graph to see their areas. by CS w/ Rent Control PS w/ Rent Control Deadweight Loss Which of the following are generally true of rent control? Check all that apply. The quantity of available rental apartments increases. Non-price methods of rationing emerge. All consumers gain from rent control. The quality of rental apartments falls. Everyone who needs a place to live can rent an apartment. per month and producers' surplus per month of deadweight loss. Tool tip: Click on the shaded by
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Suppose the following graph shows the demand for, and supply of, apartments in New York City.
Use the black point (plus symbol) to indicate the equilibrium monthly rent and quantity of apartments in the absence of price controls. Then use the
green point (triangle symbol) to fill the area representing consumers' surplus, and use the purple point (diamond symbol) to fill the area representing
producers' surplus.
2800
Demand
2600
2400
2200
2000
1800
Supply
2.4
3.2
QUANTITY OF APARTMENTS (Millions per month)
4.0
Equilibrium
A
CS
PS
Suppose that the government decides to impose a rent control of $2,100 per month on rental apartments in New York City. On the following graph,
use the green point (triangle symbol) to shade the area representing consumers' surplus in the presence of rent control. Use the purple point
(diamond symbol) to shade the area representing producers' surplus after the rent control. Then use the grey point (star symbol) to shade the area
representing deadweight loss resulting from the rent control.
MONTHLY RENT (Dollars p
2800
2600
2400
2200
Demand
Rent Celling
2000
Supply
1800
0.8
2.4
3.2
QUANTITY OF APARTMENTS (Millions per month)
4.0
In the presence of the rent control, consumers' surplus
per month. The price ceiling on rent causes
regions in the graph to see their areas.
CS w/ Rent Control
PS w/ Rent Control
by
Deadweight Loss
Which of the following are generally true of rent control? Check all that apply.
The quantity of available rental apartments increases.
Non-price methods of rationing emerge.
All consumers gain from rent control.
The quality of rental apartments falls.
Everyone who needs a place to live can rent an apartment.
per month and producers' surplus
per month of deadweight loss. Tool tip: Click on the shaded
by
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Step 1: Define consumer surplus and producers surplus.
VIEWStep 2: Plot and calculate consumer surplus and producer surplus before rent control.
VIEWStep 3: Plot and calculate consumer surplus and producer surplus after rent control.
VIEWStep 4: Fill in the blanks.
VIEWStep 5: Choose the correct statement.
VIEWStep 6: Reject the incorrect staements.
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