Rent control is common in some cities, particularly in the United States. You will
have noticed some of the consequences in movies or TV shows, usually police stories,
set in the high-rise areas of New York City, for example. Suppose you have been
given the following information about the market for rental housing in Winona:
Quantity Demanded
Rent (dollars per month)
$500
550
600
650
700
750
800
20,000
15,000
10,000
5,000
2,500
1,500
1,000
a) What is the equilibrium rent?
b) What is the equilibrium quantity of rented housing?
Quantity Supplied
10,000
10,000
10,000
10,000
10,000
10,000
10,000
Now suppose that a rent ceiling of $700 is imposed in the housing market for Winona.
c) What is the quantity of housing demanded?
d) What is the quantity of housing supplied?
e) Is there excess demand for or excess supply of housing with the imposition of a
rent ceiling? Explain what is happening in the market for rental housing market in
Winona.