Final answer:
Renters would continue to pay the rent control price of $500 per acre, while landowners' net income would decrease by the tax amount. A tax increase, compounded with rent control, leads to a shortage of rental units due to demand exceeding supply at the capped rent price.
Step-by-step explanation:
In the market for land, if the government increases the tax on land, renters may end up paying more and landowners receiving less net-of-tax income, depending on whether the tax is passed on to renters. However, considering there is a rent control law keeping the price fixed at the original equilibrium rent, the rent paid by renters would remain at $500 per acre. The landowners' net-of-tax income per acre would be reduced by the amount of tax levied on them as they wouldn't be able to pass this tax on to the renters due to the price ceiling. There would be a shortage of rental housing because the quantity demanded at the price ceiling (19,000 rental units) exceeds the quantity supplied (15,000 rental units).
When the market for rental housing experiences an increase in demand, it normally results in increased equilibrium rent and quantity. However, when a rent control is enforced, it leads to a shortage, as the set price is lower than the new market equilibrium price, which results in demand exceeding supply. This is relatively inefficient as it leads to both a loss of potential revenue for landlords and reduced availability of rental units in the market, sometimes leading to market distortions and underutilization of the housing stock.