ECO - Suppose in the market for apartments in Seattle

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Suppose in the market for apartments in Seattle the equilibrium price is $1000 a month and the equilibrium quantity is 50,000. Now assume, due to rising apartment rates, the  government puts a price ceiling in place which does not allow the price of apartments to  rise above $800 a month. At $800 a month, landlords supply 40,000 apartments and  consumers would like to purchase 70,000 apartments.

 

Provide a graphical analysis of the effects of a price ceiling on consumer surplus, producer surplus and total welfare. Shade  in the area that represents the deadweight loss. 

    • 11 years ago
    ECO - Suppose in the market for apartments in Seattle (Graphical Analysis)
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