Does the rent maximum generate a deadweight loss

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Reference no: EM131130234

Maximum Rent on Land. Consider a state where all land is occupied by mobile-home parks, and each household rents one padacre (a standard pad for a mobile home). In the market equilibrium, the rent is $200 per padacre. Suppose the government sets a maximum rent of $150 per padacre, regardless of how the land is used. Recall the old saying The trouble with land is that they re not making it anymore.

a. Use a supply-demand graph to depict the market with the maximum rent.

b. Does the rent maximum affect the equilibrium quantity of land?

c. Does the rent maximum generate a deadweight loss? If not, why not?

Reference no: EM131130234

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