Figure 4-10 shows the market for apartments in Bay City.Recently,the government imposed a rent ceiling at R0.
-Refer to Figure 4-10.With rent control,the quantity supplied is Q1.Suppose apartment owners ignore the law and rent this quantity for the highest rent they can get.What is the highest rent they can get?

Question

Quizplus · Accepted Answer

The highest rent apartment owners can get is represented by the point on the supply curve where it intersects with the demand curve, which is R1 in this case. This is below the rent ceiling of R0 imposed by the government. If they charged more than R1, the quantity demanded would be lower than Q1 and they would be unable to rent out all their apartments.

Figure 4-10 Shows the Market for Apartments in Bay City