Rent

(dollars per month) Quantity demanded

(units per month) Quantity supplied

(units per month)

500 1,200 0

600 1,000 100

700 800 200

800 600 300

900 400 400

1,000 200 500

1,100 0 600

a) Draw the demand and supply curves. With no rent ceiling, what is the rent and how many apartments are rented? (5 marks)

b) With the rent ceiling, what is the rent and how many apartments are rented? What is the shortage of housing? Explain. (5 marks)

c) If the rent ceiling is strictly enforced, what is the maximum price that someone is willing to pay for the last unit of housing available? Is the housing market efficient? Explain. (5 marks)

d) If a black market develops, how high could the black market rent be? Explain your answer. (5 marks)