Use the graph to answer the question that follows.

Graph with the title rental housing market has quantity along the horizontal axis and rent price along the vertical axis. The quantity on the horizontal axis starts at zero and increases by two thousand units up to seven thousand units. The rent price on the vertical axis starts at zero dollars and increases by two hundred dollars up to sixteen hundred dollars. A downward sloping line indicates demand. An upward sloping line indicates supply. The demand and supply curves intersect when the rent price is one thousand dollars and the quantity is five thousand units.

Assume the government sets a price ceiling, or maximum price, of $800 rent per month. Based on the graph, what will be the outcome of this price ceiling?

There will a rental housing surplus.

There will be a rental housing shortage.

The equilibrium price will increase.

The equilibrium quantity will increase.

A shortage is when the demand for a product or service is higher than the supply of it, and a surplus is the opposite when there is less demand than what is produced so there ends up being more product than what is actually needed. An equilibrium point is where the supply and demand intersect each other, meaning that product supply is exactly what is demanded having no extra or lack of product.

In this case the government is setting the price at $800 which is $200 below the equilibrium point, which means that more people will want to rent and the supply will not meet the demand ending up being a rental housing shortage.