Suppose that the government wishes to decrease the market equilibrium monthly re

Question

Suppose that the government wishes to decrease the market equilibrium monthly rent by increasing the supply of 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?

Market Equilibrium rental price

Monthly Rent    Apartments Demanded    Apartments Supplied
2500                           10000       15000
2000                           12500   12500
1500    15000                             10000
1000                           17500                              7500
500                             20000                              5000

Explanation / Answer

for a P=1500 supply would have to increase by 2500 to 15000 for a P=1000 supply would have to increase by 5000 to 17500 for a P=500 supply would have to increase by 7500 to 20000

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