The demand function for rental accommodation in Halifax is estimated to be: Qd = 2,000 + 15M - 5.5P

Where M is income in thousands of dollars, Q is the quantity demanded for a 300 square feet apartment, and P is the rent per apartment. The supply function is estimated to be:

Qs = P Assume the current income is 15(000) dollars.

What is the market clearing rent and number of apartments in Halifax?

What is the social surplus when the market clears?

Suppose a rent control law is introduced under which landlords cannot charge more

than $250 for the 300 square feet apartment. Using calculations, explain how the market

will respond?

What will happen to social surplus at the controlled rent?

Calculatethepriceelasticityofdemandwhenmarketclears.

Calculate the income elasticity of demand when market clears.

Write,inafewsentences,yourconclusionabouttheimpactofrentcontrols,basedon

the results you have obtained. (Note: In parts a-d, also show your results in a diagram, clearly drawn).