AP Microeconomics | 2.

4 Assignment Graphing

Directions:
Answer each question below. You can complete the assignment in this document, using the drawing tools in Word (or
any photo editing program) or print this document and complete the activity by hand, submitting a scan or photo of your
work. Each question will be graded out of 4 points with 2 points given for the graph and 2 points for the explanation.

1) New York City has passed an ordinance stating that apartment rents can go no higher than $1000 dollars a month.
Renters in the city are jumping for joy. For years they were paying an average rent of $1500 dollars a month. Draw and
label a supply and demand graph that illustrates the New York City apartment rental market at equilibrium and after the
new ordinance. Show on the graph and explain the consequences to the apartment rental market because of the new
ordinance.
The graph would show a horizontal line at $1000 for the new rent cap, with a higher quantity of apartments rented but no
change in the quantity supplied. This would result in excess demand, as more people want to rent at $1000 than there are
apartments available at that price.

2) The current market price for carrots is $1 per bushel. Recently the government passed a law stating that the price of
carrots must sell for $3 per bushel. Draw and label a supply and demand graph that illustrates the carrot market at
equilibrium and after the new law. Show on the graph and explain the consequences to the carrot market because of
the new law.
The graph would show a vertical line at $3 for the new mandated price, with a higher price but no change in the quantity
supplied. This would result in excess supply, as suppliers are willing to sell more carrots at $3 than there are consumers
willing to buy at that price.

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