Question

1. You have been given the following information about the housing market for two bedroom rental units in Vancouver: Rent Quantity Demanded Quantity Supplied (dollars per month) (per month) (per month) 1,100 20,000 0 1,200 15,000 5,000 1,300 10,000 10,000 1,400 5,000 15,000 1,500 2,500 20,000 1,600 1,500 25,000 Hand draw a supply and demand graph to illustrate the housing market above

. a) What is the equilibrium rental price? ____________________

b) What is the equilibrium quantity of housing?________________________

Answer 1

Rent	Quantity demanded	Quantity supplied
1100	20000	0
1200	15000	5000
1300	10000	10000
1400	5000	15000
1500	2500	20000
1600	1500	25000

a. The equilibrium is where the quantity demand equals the quantity supplied. Note that the quantity demanded and quantity supplied are equal at a rent equal to $1300, and thus the equilibrium rental price is $1300.

b. The corresponding equilibrium quantity of housing is 10,000 housing units.