Question

The Metropolitan Government plans to amend its rent control ordinance to allow that all "new" rental units be supplied and rented free of rent control, while upholding the rent control on all existing (old) rental units at p = $2.00. QUESTIONS (REVISED RENT CONTROL): • Indicate in the diagram, the rental price (p') for a new unit and the number of new units (Q') in equilibrium of the market for rental housing. Shade and mark the area corresponding to the additional consumer surplus ACS that new renters obtain from the new units supplied free of the rent control. Shade and mark the area corresponding to the additional producer surplus APS" that suppliers obtain from new units they let. Fill in the blanks in the table on the next page. 0 1 2 3 4 5 6 7 8 9 10

Answer 1

New Cs=dx(10-2)* 8 - (4-2)*(8-4) 932–4 New ok Towe DWL es psatt (2) + 4 1 2 3 4 5 6 7 8 9 lo Q LES 12 I pc 27 S5 = + Ps a 28 ty 33 D r DWL = tx(4-2)*(9-4)

임 - cs - (ios) (4) 99 16ss 3 ² - | ( 3 18 3 0 st | + x (4) (1) 으U+842 의 ss= PStcs 2 18 A c 22 스CS 218스10 os140