00:01
Understanding the impact of housing regulations, particularly rent regulations, we need to understand how a price ceiling works.
00:09
So in areas where housing markets tend to be regulated in terms of rent, this means that a price ceiling is set stating that the rents cannot exceed that amount.
00:19
And this is usually going to occur when people consider this equilibrium, this market clearing rent right here, which occurs at equilibrium to be too high.
00:28
So as a result, they set this price ceiling below the equilibrium.
00:32
Let's call that pc.
00:34
And as a result of setting this price ceiling, what we see is that our demand exceeds our supply.
00:44
And as a result of demand exceeding our supply, so we have qd is greater than qs, we break that identity which occurs at equilibrium where qs is equal to qd.
00:57
And all of a sudden, we end up with a shortage...