https://file.aiquickdraw.com/mathbot/file/1726804058439192q9w4l.jpg

Multiple Choice

There will be a shortage (excess demand) for apartments.The market will be in equilibrium at a price of $400.

Demand for apartments in Merced will decrease and the market will reach equilibrium at a price of $400.

Supply of apartments in Merced will increase and the market will reach equilibrium at a price of $400.

The question asks what will happen if the city of Merced imposes a price ceiling, preventing landlords from charging more than $400 for apartments. The provided graph shows the supply curve (S) and demand curve (D) for apartments, with rental prices on the y-axis and the quantity of apartments on the x-axis.

Here's the analysis:

1. **Price Ceiling at $400**: The city sets the price ceiling at $400, which is below the equilibrium price (around $600). At this lower price, the quantity of apartments demanded (around 150 units) exceeds the quantity of apartments supplied (around 50 units). This creates a **shortage** (excess demand), as the quantity demanded is higher than the quantity supplied.

2. **Market Effects**:
   - **No equilibrium at $400**: The market will not reach equilibrium at $400 because the price ceiling prevents landlords from charging higher rents, and at this price, there's not enough supply to meet the higher demand.
   - **Excess Demand**: Since more people want apartments at the lower price than there are apartments available, this leads to a **shortage**.

**Correct Answer**:  
The option that correctly describes the situation is **"There will be a shortage (excess demand) for apartments."**

Let me know if you need further details or have any questions.

Here are 5 related questions you might consider:
1. What is the difference between a price ceiling and a price floor?
2. How does a price ceiling affect the welfare of consumers and producers?
3. What are some potential unintended consequences of setting price ceilings in a rental market?
4. How can landlords and renters respond to a shortage caused by a price ceiling?
5. Could other government interventions help to alleviate the shortage caused by the price ceiling?

**Tip**: A price ceiling below equilibrium can create inefficiencies in the market, leading to black markets or lower-quality housing due to reduced supply.

Suppose that the city of Merced will not allow landlords to charge more than $400 for an apartment. Which of the following will happen?

Explore the impact of a $400 price ceiling on the apartment rental market in Merced. This analysis covers key economic concepts such as supply and demand, market equilibrium, and the consequences of excess demand, including shortages. Suitable for economics students.

Math Problem Statement

Solution

Ask a new question for Free

By Image

Math Problem Analysis

Mathematical Concepts

Formulas

Theorems

Suitable Grade Level

Related Recommendation