AP Macroeconomics

2.4 Price Floor and Ceilings Graphing Assignment

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.

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.