Imagine the German parliament adopts a new law that forces landlords to give tenants six months notice before evicting them. Up to the reform standard apartments were rented for 500€ per month.
a) Explain - verbally and graphically - the effect on the housing market if the new law imposes a 50€ cost per apartment on landlords and tenants benefit by 50€.
b) Assume now that tenants benefit by 70€. Is the reform still necessary? Discuss your answer.
c) Do your results change when there are different types of landlords and tenants? Explain your answer