Table 1 Rentdollars/p/mth Quantitydemanded Quantity supplied 500 2500 2000 550 2

Question

Table 1

Rentdollars/p/mth          Quantitydemanded               Quantity supplied

500                                         2500                                                        2000

550                                              2230                                                  2000

600                                          2000                                                      2000

650                                              1750                                                 2000

700                                             1500                                                   2000

750                                             1250                                                  2000

Table 1 shows the demand and supply schedule for on campushousing

What are the equilibrium rent and number of rooms

If the college puts a rent ceiling on rooms of 650 a month whatis the rent and how many rooms are rented

If the college puts a rent ceiling of 550a month what is therent and how many rooms are rented

If the college strictly enforced the rent ceiling of 550 a monthis the on campus housing market efficient ?

If a black market develops how high could the black market rentbe

If the black market develops is the housing fair ?

Explanation / Answer

What are the equilibrium rent and number of rooms
Equilibrium is demand = supply so: 600                                          2000                                                      2000 600 dollars 600                                          2000                                                      2000 600 dollars If the college puts a rent ceiling on rooms of 650 a monthwhat is the rent and how many rooms are rented
Ceiling means no price can be higher thanthat, since it is above the equilibrium (price ceiling has noeffect), all 2000 rooms are rented and the price is 600dollars If the college puts a rent ceiling of 550a month what is therent and how many rooms are rented
it would probably be 550 with 2000 rented (ashortage occurs) If the college strictly enforced the rent ceiling of 550 amonth is the on campus housing market efficient ?
NO, price ceilings or anygovernment/institutional internvention on free market isinefficient and also there is a shortage of housing If a black market develops how high could the black marketrent be
Black market will be the free market whichwould rent the extra room in 600 to be most efficient If the black market develops is the housing fair ? It is fair in a sense that it follow theconcept of free market, it is not fair to consumers who has to paymore

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