Suppose that the demand and supply schedules for rental apartments in the city o

Question

Suppose that the demand and supply schedules for rental apartments in the city of Gotham are as given in the table below. What is the market equilibrium rental price per month and the market equilibrium number of apartments demanded and supplied? Market equilibrium rental price is per month. Market equilibrium quantity is apartments. If the local government can enforce a rent-control law that sets the maximum monthly rent at $2, 250, will there be a surplus or a shortage? Of how many units? apartments per month. How many units will actually be rented each month? apartments. Suppose that a new government is elected that wants to keep out the poor. It declares that the minimum rent that can be charged is $3, 250 per month. If the government can enforce that price floor, will there be a surplus or a shortage? Of how many units? apartments per month. How many units will actually be rented each month? apartments.

Explanation / Answer

Answer to blank 1: $2750   (Determined by Demand = Supply)

Answer to blank 2: 12,500 units (Determined by Demand = Supply)

Answer to blank 3: Shortage   (At Rental of $2250, demand is more than supply)

Answer to blank 4: 5000 units (i.e. Demand - Supply = 15000 - 10000)

Answer to blank 5: 10000 appartments

Answer to blank 6: Surplus (At Rental of $3250, demand is less than supply)

Answer to blank 7: 5000 units (i.e. Supply - Demand = 15000 - 10000)

Answer to blank 8: 10000 appartments

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