What is the market equilibrium rental price per month and the market equilibrium

Question

What is the market equilibrium rental price per month and the market equilibrium number of apartments demanded and supplied? b. If the local government can enforce a rent-control law that sets the maximum monthly rent at $1500, will there be a surplus or a shortage? Of how many units? And how many units will actually be rented each month? c. Suppose that a new government is elected that wants to keep out the poof. It declares that the minimum rent that can be charged is $2500 per month. If the government can enforce that price floor, will there be a surplus or a shortage? Of how many units? And how many units will actually be rented each month? d. Suppose that the government wishes to decrease the market equilibrium monthly rent by increasing the supply the housing. Assuming that demand remains unchanged, by how many units of housing would the government have to increase the supply of housing in order to get the market equilibrium rental price to fall to $1500 per month? To $1000 per month? To $500 per month?

Explanation / Answer

a. Market equillibrium is at level where demand and supply are equal, hence rental price is $2000 for market equillibrium

b. At $1500 rental there will be shortage of units. Shortage will be of 5000 units and only 10000 units can be supplied

c. At minimum rental of $2500 there will be a surplus of 5000 units and only 10000 units can be rented

d. At $1500 - 5000 units to be supplied more. At $1000 - 10000 units to be supplied more. At $500 - 15000 units to be supplied more

Related Questions

Navigate

• Browse (All)
• Browse W
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.