Refer to Figure 4-10. With rent control, the quantity supplied is ...

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Refer to Figure 4-10. With rent control, the quantity supplied is Q1. Suppose apartment owners ignore the law and rent this quantity for the highest rent they can get. What is the highest rent they can get?
 
  A) more than R1 B) R C) R1 D) R0

Question 2

Explain why resources are used efficiently in a competitive market.
 
  What will be an ideal response?

[harveenkau8139]

Answer to Question 1

C

Answer to Question 2

Resources are used efficiently in a competitive market because the market demand curve is the same as the marginal social benefit curve and the market supply curve is the same as the marginal social cost curve. The equilibrium quantity, determined by where the demand and supply curves intersect, is the same quantity where the marginal social benefit and marginal social cost curves intersect, which is the efficient quantity.

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