Assume in downtown Chicago the equilibrium rent for two-bedroom apartment is $900 per month. The city council decides to place price ceiling on apartments and will not permit landlords to charge more than $700 per month. Draw this condition using a graph. Ensure that you show the original equilibrium and the effect of the price ceiling on the market. What will occur in this market?
There will be a shortage of apartments since quantity demanded (QD) is greater than quantity supplied (QS).
