00:02
First, we need to draw a correctly labeled graph for the apartment market with equilibrium price and quantity.
00:13
Since the supply of apartments is perfectly inelastic, so the supply curve will be a vertical line.
00:23
The equilibrium price is $1000 per apartment and the equilibrium quantity is 700 apartments.
00:32
Now let's assume the government imposes a price ceiling of $800 for an apartment.
00:39
On a graph, draw a horizontal line at the price level of $800.
00:44
This line represents price ceiling.
00:52
Then to find the quantity demanded, which is qd at the price ceiling, we need to look at the point where the demand curve intersects the price ceiling line.
01:01
Label this point as qd.
01:04
So since the supply of apartments is perfectly inelastic, this quantity supplied, qs, will remain the same as the equilibrium quantity, which is 700 apartments.
01:19
So label this point as qs on the graph.
01:23
Now on the graph, shade the area representing the consumer surplus after the imposition of the price ceiling...