Suppose in the market for apartments in Seattle the equilibrium price is $1000 a month

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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. 

  • 10 years ago
Suppose in the market for apartments in Seattle the equilibrium price is $1000 a month
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