1. Arrow up or down: In Figure 21.5 on page 470, rent control
the quantity of apartments
, producer surplus
, consumer surplus, and the total market surplus.
fig. 21.5
2. In Figure 21.5 on page 470, rent control prevents a total of
mutually beneficial transactions for consumers on the demand curve between points and producers on the supply curve between points
and
.
fig. 21.5
3. In Figure 21.5 on page 470, suppose rent control is partly relaxed, with the maximum price rising from $300 to $350. The quantity of apartments on the market will increase from to
.
4. In Figure 21.5 on page 470, a consumer who is on the demand curve halfway between points c and a would be willing to pay $
above the controlled price to get an apartment. A producer who is on the supply curve halfway between points b and a would be willing to supply an apartment at a price of $
, or above the maximum price.
5. In Figure 21.10 on page 478, the triangle abc shows the deadweight loss, which is
the in the total
of the market.
fig.21.10.
6. During World War II, candy producers reacted to
prices by
the weight of candy bars. (Related to Application 3 on page 471.)
fig 21.5
7. Excess Supply from a Minimum Bread Price. In the bread market, the quantity is 200 million units and the price is $3.00 per unit in equilibrium. The price elasticity of demand is 0.50 and the price elasticity of supply is 1.50. Suppose the government imposes a minimum price of $3.50.
a. Draw a graph to show the market effects of the minimum price.
b. At the minimum price, the quantity of bread supplied is
million units, the quantity demanded is
million units, and the excess supply is
million units.