Final answer:
Fair Market Rent is the term that describes the expected rent of a vacant property based on current market conditions. Rent control laws can disrupt market equilibrium, leading to housing shortages and the irony of fewer rented units.
Step-by-step explanation:
The rent that a leased property would expect to rent for under current market conditions if the property were vacant and available for rent at current rental rates is known as Fair Market Rent.
Considering the scenario where a rent control law keeps the price at the original equilibrium of $500 for a typical apartment, it results in a legally fixed maximum price which disrupts the natural balance of supply and demand. The imposed rent ceiling leads to a shortage of rental housing due to the unchanged supply at 15,000 rental units while demand increases to 19,000 rental units, highlighting the unintended consequences of price ceilings where fewer apartments are rented out than would be at the market rent of $600 for 17,000 rental units.