-The above figure shows the apartment rental market in Bigtown. If the Bigtown Housing Authority imposes a rent ceiling of $500 per apartment, the deadweight loss will be

Question

Quizplus · Accepted Answer

A rent ceiling set below the equilibrium price (in this case, $500) causes a shortage in the market, leading to inefficiency. The deadweight loss is the loss of economic efficiency when the equilibrium outcome is not achievable or not achieved. In this scenario, without seeing the specific figure, the general principle is that the deadweight loss can be represented graphically as the area of a triangle formed by the supply and demand curves and the rent ceiling line. The exact value of the deadweight loss ($250,000) would be calculated based on the specifics of the supply and demand curves and the distance between the rent ceiling and the market equilibrium rent.

-The Above Figure Shows the Apartment Rental Market in Bigtown