Question

1) The equations below can be used to analyze the apartment rental market of Detroit, Michigan. The city of Detroit has hired you as a consultant to compare two polices aimed at reducing the cost of housing. ?=????−.???? ?=???+.???

a) Calculate the equilibrium price and quantity for housing, show graphically. Be sure to include all supply and demand intercepts. Use a straight edge to draw the graph.

b) Suppose that a $120 subsidy is given to each renter (consumer). Calculate the after-subsidy quantity, price consumers pay, and price sellers receive. Show solution graphically.

c) Calculate the total cost of the subsidy.

d) Calculate the deadweight loss.

e) Suppose that the government decides to replace the subsidy with a price control. The government sets a price ceiling of $860 dollars in the apartment rental market. Calculate the number of apartments that will be rented under the new policy and show graphically.

f) How many people will lose an apartment?

g) Calculate the change in social welfare under the new policy.

h) Write a small paragraph comparing the two government policies. Which would you support and why?

Answer #1

Draw a hypothetical supply-demand graph for the apartment rental
market in San Francisco. In your graph what is the equilibrium
price and quantity of apartments? Show the impact of a binding
price ceiling that San Francisco puts on rental properties. At the
price ceiling what is the quantity demanded? What is the quantity
supplied?

4) If the rental market for a two bed room apartment in Edison
has a equilibrium price $3000 and the equilibrium quantity 200units
and Phil Murphy passes a law that mandates property owners to rent
out their 2 bedroom apartments for $2500, explain what type of
policy Murphy implemented impact this will have on the market. (i.e
price floor or price ceiling) Hint Draw the graph and explain in
detail this markets the rental market will have

Consider the market for rental housing in New York City (NYC).
The market price for a rental home in NYC is $1500 per month. At
this price, one million rental homes are bought and sold. In an
effort to help low-income individuals afford housing, the city is
considering implementing a price ceiling of $1000.
a)Construct a supply-and-demand diagram that illustrates the
effects of a $1000 price ceiling that is implemented in the rental
market in NYC. Do buyers benefit? Do...

Suppose there is a market at its competitive equilibrium.
Demand p = 100 - QD
Supply p = 20 + (QS /3) The government introduces a subsidy of s
= $4 per unit of the good sold and bought.
(a) Draw the graph for the demand and supply before subsidy.
(b) What is the equilibrium price and quantity before the
subsidy and after the subsidy?
(c) Looking at the prices buyers pay and sellers receive after
the subsidy compared to...

2. The demand and supply functions for rental accommodation in
Metroland are as follows: Qd = 120 - P Qs = 2P a. Solve for the
competitive equilibrium rental rate (P) and quantity (Q) of rental
units in Metroland. Illustrate this equilibrium in a graph. b. On
your graph, show the regions that represent consumer surplus and
producer surplus. Calculate the value of consumer surplus, producer
surplus, and overall welfare. c. Suppose the City of Metroland
enacts a rent control...

2. The demand and supply functions for rental accommodation in
Metroland are as follows:
Qd =120-P
Qs = 2P
a. Solve for the competitive equilibrium rental rate
(P) and quantity (Q) of rental units in
Metroland. Illustrate this equilibrium in a graph.
On your graph, show the regions that represent consumer surplus
and producer surplus. Calculate the value of consumer surplus,
producer surplus, and overall welfare.
b. Suppose the City of Metroland enacts a rent control ordinance
that imposes a...

Q d= 20- 2P
Qs = 4p -10
Derive equilibrium price and quantity for this market.
Calculate Ed,p and Es, p at the above equilibrium
If a one dollar excise tax is imposed on buyers, what will be
the tax burden shouldered by buyers and sellers respectively?
Show the price paid by buyers and received by sellers
respectively.
Calculate DWL due to this tax.
Given the same demand and supply, if a one-dollar subsidy is
provided to the sellers, what...

Assume that the diagram below describes the apartment market in
Newark.
Part 1: Suppose that the government decides to impose rent control
in the amount of $600. Draw the price ceiling line.
Part 2: Use drop lines to indicate the quantity demanded
(Q-Demanded) and the quantity supplied (Q-Supplied) after the
imposition of the rent control.
Part 3: Use an area tool to illustrate the amount of consumer
surplus if only those who value apartments at a price greater than
or...

Consider a perfectly competitive market for rental housing. The
monthly (inverse) demand and supply functions for rental units are
given by P = 70 – 0.7QD & P = 10 + 0.3QS, where P is monthly
rent, and Q is the number of rental units. Note: Each numerical
value MUST be rounded to ones. ex) 34.3 --> 34 or 1.5 -->
2
Part a) Using the given inverse functions above, compute the
equilibrium price and quantity.
Q* =
P* =...

The Wonka chocolate bar market can be represented using the
supply and demand equations below.
?? =587.5−50? ?? =500?−375
a) Find the price and quantity intercepts for the demand
curve.
b) Find the price intercept for the supply curve. (note: no need
to solve for the quantity intercept)
c) Find the equilibrium price and quantity for Wonka chocolate
bars.
d) Using the supply and demand graph, show the following items:
demand intercepts, supply intercept, and the market equilibrium.
Make sure...

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