a)
Equilibrium rent and
a)
Explanation of Solution
The equilibrium is attained at the point where demand equals the supply. By the figure, the equilibrium rent is $450 dollars per month and the equilibrium quantity of house rented is 20,000 housing units.
Demand: Demand refers to the total value of the goods and services that are demanded at a particular
Supply: Supply refers to the total value of the goods and services available for purchase at a particular price in a given period of time.
b)
Rent paid and shortage of housing.
b)
Explanation of Solution
Since the rent ceiling of $600 per month is set above the equilibrium rent of $450 per month, the action does not make the equilibrium rent illegal or irrelevant. Thus, the renters will pay the equilibrium rent of $450 per month. There will be no shortage of housing as the quantity demanded of housing units will be equal to the quantity supplied (20,000 housing units).
Rent ceiling: Rent ceiling is a
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Chapter 6 Solutions
Microeconomics, Student Value Edition Plus MyLab Economics with Pearson eText -- Access Card Package (13th Edition)
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