1. You are a policy maker and you are given a proposal to add a rental price ceiling of C on the rental price of apartments in DC.
   1. Define price ceiling.
   2. Show the initial equilibrium price and quantity and the new equilibrium price and quantity. Explain.
   3. Is there a shortage or surplus of apartments? How do you know?
   4. What happens to consumer surplus, producer surplus, and DWL?
   5. As a policy maker, do you think rental price ceilings are a good idea? Explain why or why not using the outcomes you found.

Answer rating: 100% (QA)

A price ceiling is a governmentimposed limit on how high a price can be charged for a product or ser... View the full answer