Short free-response question
A cap on rents
- Unit 2
- 5 points
- About 12 minutes
You can use a calculator on this question, just like on exam day.
A shorter question with a few lettered parts on one situation, often built on a table, a payoff matrix or a given or described graph. You make claims, explain them, calculate a value, or describe a labeled graph and show a change on it. On the exam: Questions 2 and 3 of 3 in Section II; 5 points each, a quarter of the section score each. About 12 minutes suggested for each. Four-function calculator allowed.
The question and its sources
The table shows the monthly demand and supply schedules for one-bedroom apartments in Brookport, a perfectly competitive market. The demand and supply curves are straight lines.
Table 1. Market for one-bedroom apartments in Brookport
| Monthly rent | Quantity demanded (apartments) | Quantity supplied (apartments) |
|---|---|---|
| $800 | 1,200 | 400 |
| $1,000 | 1,000 | 600 |
| $1,200 | 800 | 800 |
| $1,400 | 600 | 1,000 |
| $1,600 | 400 | 1,200 |
Source: Hypothetical data
Suggested time: 12 minutes
Your answers are saved in this browser as you type.
Part (a)
1 pointIdentify the equilibrium monthly rent and the equilibrium quantity of apartments.
0 / 2,500 characters
Part (b)
1 pointThe city government sets a maximum rent of $1,000 per month. Calculate the resulting shortage or surplus of apartments, and identify whether it is a shortage or a surplus. Show your work.
0 / 2,500 characters
Part (c)
1 pointDescribe a correctly labeled graph of the apartment market that shows the $1,000 maximum rent and the shortage or surplus it creates.
0 / 2,500 characters
Part (d)
1 pointCalculate the deadweight loss caused by the $1,000 maximum rent. Show your work.
0 / 2,500 characters
Part (e)
1 pointSuppose instead the city sets the maximum rent at $1,400 per month. Identify the effect on the quantity of apartments rented, compared with the market equilibrium. Explain.
0 / 2,500 characters
Checking scoring…
Scoring it yourself shows you the rubric, examples and a model answer. Try writing your answer first.