Question

1) A price ceiling is a price A) below which a seller cannot legally sell B) above which a seller cannot legally sell C) that creates a surplus of the good D) Both answers A and C are correct 2) Sherry wants to rent an apartment. Although rents are below what she is willing to pay, she cannot find an apartment. Then after a month of searching, she finds an apartment but she has to pay an additional $1,000 to have the locks changed. Sherry has just experienced the effects of A) a rent floor with a black market B) inelastic demand C) a market working efficiently D) a rent ceilin S 1250 1000 750 500 250 1 2 3 5 4 Quantity (thousands of apartments per month) 3) The above figure shows the apartment rental market in Bigtown. At what rent will there be neither a shortage nor a surplus of apartments? A) $1250 per month B) $1000 per month C) $750 per month D) $500 per month Rent (dollars per month)

Answer 1

1) B) above which the sellers cannot legally sell

2) D) rent ceiling

Rent ceiling creates shortage of apartments

3) C) $750 per month

There is no shortage or surplus at equilibrium where demand is equal to supply.