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?