Question

Landlords show up at the next council meeting and demand an increase in rents. The council members (concerned about their upcoming re-election campaigns) vote to repeal the price ceiling and instead replace it with a price floor that is RM50 above the equilibrium price. what is the new market price? how many two bedroom apartments will be rented?

Answer 1

The new market price will settle at 25 units above the previous equilibrium price. The number of leased apartments will decrease by at least 20%.