Demand and supply equations for housing market per month are given below. • Demand for housing: ?? = 2500 − 0.5 ? • Supply of housing: ?? = −500 + ? A) Suppose that the government set a rent ceiling at $1800. What are the quantities of housing supplied and demanded at this price? In this case, is there a shortage or surplus of houses? B) How does the price ceiling affect the efficiency in the housing market? C) Calculate the deadweight loss in the housing market after the price ceiling is imposed by the government.
Demand and supply equations for housing market per month are given below. • Demand for housing: ?? = 2500 − 0.5 ? • Supply of housing: ?? = −500 + ? A) Suppose that the government set a rent ceiling at $1800. What are the quantities of housing supplied and demanded at this price? In this case, is there a shortage or surplus of houses? B) How does the price ceiling affect the efficiency in the housing market? C) Calculate the deadweight loss in the housing market after the price ceiling is imposed by the government.
Chapter4: Markets In Action
Section: Chapter Questions
Problem 1SQP
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Demand and supply equations for housing market per month are given below.
• Demand for housing: ?? = 2500 − 0.5 ?
• Supply of housing: ?? = −500 + ?
A) Suppose that the government set a rent ceiling at $1800. What are the quantities of
housing supplied and demanded at this price? In this case, is there a shortage or
surplus of houses?
B) How does the
C) Calculate the
imposed by the government.
D) Calculate the potential spending for housing search activities.
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