Data scientists at airbnb estimate that the demand for weekly rentals of apartments in miami during the summer months is given by qd = 600 – 0.5p, where q is the number of rentals (in thousands) and p is a week’s rent. suppose the available supply of rentals is perfectly inelastic at 200 (thousand) units.

a) sketch the market, and calculate the consumer surplus received by vacationers visiting miami and the producer surplus received by owners of the rental units.

b) in order to property owners in miami, the city of miami decides to set a price floor of $900 for a week’s rent. analyze the welfare effect of such policy (i. e., calculate the change to consumer surplus, producer surplus, total surplus, and the deadweight loss).

c) now suppose that instead of a price floor, the city of miami set a price ceiling of $600 for a week’s rent (in an attempt to increase tourism to the city). analyze the welfare effect of this policy. explain the difference between the economic welfare outcomes of the two policies given in (b) and (c).