Sabrina Sagi 1 12/23/1 Homework: first assignment-chapters 1-4 core: 0 of 1 pt C
ID: 1131031 • Letter: S
Question
Sabrina Sagi 1 12/23/1 Homework: first assignment-chapters 1-4 core: 0 of 1 pt Concept Question 4.10 Many U.S. cities, especially those with large populations of renters, have rent controls. Suppose that New York City sets a rent control of $400 per month on one-bedroom apartments. 4-25 of 28 (19complete) HW Score: 67.86%) Question The graph on the right shows this situation. The rent control will create a shortage of apartments equal to (Q-a.) The price of apartments would be Sthere was no rent control With the rent control, the implct 1000 or black market price is likely to be 700 the ceiling price of $400 equal to the original price around $1000 Quanaty of apartmentsExplanation / Answer
In this question the equilibrium price is 700. If the authorities sets a price of 400 it will create the situation of excess demand. In excess demand the demand will be more than the supply which results to rise in the price upto the equilibrium price.
If there was no rent control obviously the price suppose to be the equilibrium price. That is 700. Because at this price only the demand equal to the supply.
With the rent control, the implicit market price will automatically reaches to all original equilibrium price.
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