(Figure: Rent Controls in the Market for Apartments in New York City) Use Figure: Rent Controls in the Market for Apartments in New York City. Suppose that rent controls are imposed. If the government wants a rent control ceiling to be effective immediately, what is one possible price it could set?
A)$1,100
B)$1,200
C)$900
D)$1,000

Question

(Figure: Rent Controls in the Market for Apartments in New York City) Use Figure: Rent Controls in the Market for Apartments in New York City. Suppose that rent controls are imposed. If the government wants a rent control ceiling to be effective immediately, what is one possible price it could set? 
A)$1,100 
B)$1,200 
C)$900 
D)$1,000

Quizplus · Accepted Answer

A rent control ceiling is a maximum price that can be legally charged for rent. In this market, imposing a rent control of $900 would be effective immediately because it intersects with the demand curve and creates a quantity demanded of 6,000 apartments and a quantity supplied of 5,000 apartments, resulting in a shortage of 1,000 apartments. Setting the rent control at any other price would not be effective immediately, as it would either result in a surplus (if set above $1,200) or a smaller shortage (if set between $900 and $1,000).