Draw the graph · Micro · Supply and demand
Rent control on apartments
Drag a curve sideways, or use its arrows. A curve you do not move is a curve you are saying stays put.
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Demand stays put. Supply stays put.
A rent cap is a price ceiling. It does not change how many apartments landlords would offer at each rent, and it does not change how many tenants want at each rent. Both curves stay put. The law is a horizontal line drawn across the market below the equilibrium rent. At that rent, tenants want more apartments than landlords supply, so a shortage appears.
Rent is held below equilibrium, so a shortage of apartments appears.
Common mistake. Students often shift supply left to 'show fewer apartments.' Fewer apartments are offered, but only because the capped rent moves landlords down along their unchanged supply curve. Drawing a shift double-counts the effect.
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