The government of Canada wants to make housing more affordable. It has asked you for advice on imposing a policy in the housing market. You first look at actual data to understand how this market works. There are only two observations for each side of the market: - When rent is $200, = 3000, and = 0 - When rent is $300, = 2000, and = 1000 a. Model the demand side: explain you model in plain English, using a graph, and an equation for demand. [Hint: Assume the quantity demand is a linear function of price.] b. Model the supply side: explain you model in plain English, using a graph, and an equation for supply. [Hint: Assume the quantity supplied is a linear function of price.] c. Find the free market equilibrium. [Hint: do not forget to check your answer] d. What are the consumer surplus, producer surplus, and total surplus in the free market?

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