c. Suppose the maximum rental price is set equal to $500
per month. Describe the effect on quantity demanded,
supplied, and exchanged in the rental-housing market.
d. Suppose a black market develops in the presence of the
rent controls in part (c). What is the black-market price
that would exist if all of the quantity supplied were sold
on the black market?
e. How is the analysis likely to be modified if we consider
the long-run supply of rental housing? Explain.
12. Consider the market for burritos in a hypothetical Canadian city,
blessed with thousands of hungry students and dozens of small
burrito stands. The demand and supply schedules are shown in
the table.
Price
($)Quantity Demanded
(thousands of burritos
per month)Quantity Supplied
(thousands of burritos
per month)