Final answer:
A free market is a market system where prices are determined by supply and demand. Rent control is a government policy that sets a maximum price for rental properties. Comparing these two markets in a graph, rent control creates a price ceiling which leads to a shortage of rental housing.
Step-by-step explanation:
A free market is a market system in which individuals are free to buy, sell, and trade goods and services without government intervention. In a free market, prices are determined by the interaction of supply and demand.
Rent control, on the other hand, is a policy implemented by governments to regulate rents and protect tenants. It typically involves setting a maximum price that landlords can charge for rental properties.
To compare the free market and rent control in a graph, we can use a supply and demand diagram. In the graph, the equilibrium price and quantity in a free market are determined by the intersection of the supply and demand curves. However, with rent control, the maximum price is set at a lower level than the equilibrium price, creating a price ceiling. This results in a shortage of rental housing, as the quantity demanded exceeds the quantity supplied.