Figure 1 shows the rental market for apartments in Corsicana, Texas.

1. What is the rent and how many apartments are rented? If a rent ceiling of $900 a month is set, what is the rent and how many apartments are rented?

2. If the city government imposes a rent ceiling of $600 a month, what is the rent and how many apartments are rented? If a black market develops, explain how high the black market rent could be.

3. If the city government imposes a rent ceiling of $600 a month and enforces it, is the housing market efficient? What is the deadweight loss? Is the housing market fair? Explain your answer.

Transcribed Image Text:

FIGURE 1 Rent (dollars per month) 1,200 1,000 800 600 0 2 4 D 1 3 5 Quantity (thousands of apartments)