Micro Economics For Today
10th Edition
ISBN: 9781337613064
Author: Tucker, Irvin B.
Publisher: Cengage,
expand_more
expand_more
format_list_bulleted
Question
Chapter 4, Problem 14SQ
To determine
The impact of a new huge apartment complex in the nearby town on the rental houses.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Suppose that the demand for rental apartments in Washington, DC, is represented by the following equation, where P is the monthly rent. QD = 10,000 – 2PThe supply of rental apartments is represented by the following equation: QS = 2,000 + 3PThe equilibrium rent is a) $ , and the equilibrium quantity is b) $ .
Part 2 (1 point)
Suppose the city council passes an ordinance placing a price ceiling of $1,200 on apartment rentals. How much of a shortage will this lead to? apartments
Suppose that the demand and supply schedules for rental apartments in the city of Gotham are as given in the following table.
Monthly Rent
Apartments Demanded
Apartments Supplied
$ 2,500
10,000
15,000
$ 2,000
12,500
12,500
$ 1,500
15,000
10,000
$ 1,000
17,500
7,500
$ 500
20,000
5,000
a. What is the market equilibrium rental price per month and the market equilibrium number of apartments demanded and supplied?
Market equilibrium rental price = $
Market equilibrium quantity = apartments
I have no idea how to solve this problem
The town council is contemplating the imposition of a R350 per month rent ceiling on apartment rooms in the town. An economist at the university estimates the demand and supply curves as: QD = 5600 - 8P QS = 500 + 4P, where P = monthly rent, and Q = number of apartments available for rent. For purposes of this analysis, apartments can be treated as identical. a) Calculate the equilibrium price and quantity that would prevail without the price ceiling.[1] b) Calculate producer and consumer surplus at this equilibrium. [3] c) Provide a rough sketch of the information calculated in (a) and (b). [2] d) What quantity will eventually be available if the rent ceiling is imposed? What is the amount of the shortage? [2] e) Calculate then resulting impact on consumer and producer surplus.[3] f) What is meant by deadweight loss? Why does a price ceiling usually result in a deadweight loss? In your answer explain the impact on both producers and consumers. [4]
Chapter 4 Solutions
Micro Economics For Today
Ch. 4.2 - Prob. 1YTECh. 4.2 - Prob. 2YTECh. 4.2 - Prob. 3YTECh. 4.2 - Prob. 4YTECh. 4.3 - Prob. 1YTECh. 4.3 - Prob. 2YTECh. 4 - Prob. 1SQPCh. 4 - Prob. 2SQPCh. 4 - Prob. 3SQPCh. 4 - Prob. 4SQP
Ch. 4 - Prob. 5SQPCh. 4 - Prob. 6SQPCh. 4 - Prob. 7SQPCh. 4 - Prob. 8SQPCh. 4 - Prob. 9SQPCh. 4 - Prob. 10SQPCh. 4 - Prob. 1SQCh. 4 - Prob. 2SQCh. 4 - Prob. 3SQCh. 4 - Prob. 4SQCh. 4 - Prob. 5SQCh. 4 - Prob. 6SQCh. 4 - Prob. 7SQCh. 4 - Prob. 8SQCh. 4 - Prob. 9SQCh. 4 - Prob. 10SQCh. 4 - Prob. 11SQCh. 4 - Prob. 12SQCh. 4 - Prob. 13SQCh. 4 - Prob. 14SQCh. 4 - Prob. 15SQCh. 4 - Prob. 16SQCh. 4 - Prob. 17SQCh. 4 - Prob. 18SQCh. 4 - Prob. 19SQCh. 4 - Prob. 20SQ
Knowledge Booster
Similar questions
- Suppose that the demand and supply schedules for rental apartments in the city of Gotham are as given in the following table. Monthly Rent $ 2,500 2,000 1,500 1,000 500 Apartments Demanded 12,500 15,000 17,500 20,000 22,500 Apartments Supplied 17,500 15,000 12,500 10,000 7,500 Instructions: Enter your answers as a whole number. a. What is the market equilibrium rental price per month and the market equilibrium number of apartments demanded and supplied? Market equilibrium rental price = $ Market equilibrium quantity= apartments b. If the local government can enforce a rent-control law that sets the maximum monthly rent at $1,500, will there be a surplus or a shortage? (Click to select) Of how many units? |apartments per month How many units will actually be rented each month? |apartments c. Suppose that a new government is elected that wants to keep out the poor. It declares that the minimum rent that landlords can charge is $2,500 per month. If the government can enforce that price…arrow_forwardSuppose that the demand and supply schedules for rental apartments in the city of Gotham are as given in the following table. a. What is the market equilibrium rental price per month and the market equilibrium number of apartments demanded and supplied? b. If the local government can enforce a rent-control law that sets the maximum monthly rent at $1,500, will there be a surplus or a shortage? Of how many units? And how many units will actually be rented each month? c. Suppose that a new government is elected that wants to keep out the poor. It declares that the minimum rent that can be charged is $2,500 per month. If the government can enforce that price floor, will there be a surplus or a shortage? Of how many units? And how many units will actually be rented each month? d. Suppose that the government wishes to decrease the market equilibrium monthly rent by increasing the supply of housing. Assuming that demand remains unchanged, byhow many units of…arrow_forwardSuppose that the demand and supply schedules for rental apartments in the city of Gotham are as given in the table below. Monthly Rent Apartments Demanded Apartments Supplied $2,750 10,000 15,000 2,250 12,500 12,500 1,750 15,000 10,000 1,250 17,500 7,500 750 20,000 5,000 Instructions: Enter your answers as whole numbers. a. What is the market equilibrium rental price per month and the market equilibrium number of apartments demanded and supplied? Market equilibrium rental price is: Market equilibrium quantity is: b. If the local government can enforce a rent-control law that sets the maximum monthly rent at $1,750, will there be a surplus or a shortage? Of how many units? How many units will actually be rented each month? c. Suppose that a new government is elected that wants to keep out the poor. It declares that the minimum rent that can be charged is $2,750 per month. If the government can enforce that…arrow_forward
- Suppose that the demand and supply schedules for rental apartments in the city of Gotham are as given in the following table. Apartments Apartments Monthly Rent $2,500 Demanded Supplied 12,500 17,500 2,000 15,000 15,000 1,500 17,500 12,500 1,000 20,000 10,000 500 22,500 7,500 Instructions: Enter your answers as a whole number. a. What is the market equilibrium rental price per month and the market equilibrium number of apartments demanded and supplied? Market equilibrium rental price = $ Market equilibrium quantity = apartments b. If the local government can enforce a rent-control law that sets the maximum monthly rent at $1,500, will there be a surplus or a shortage? |(Click to select) V Of how many units? apartments per month How many units will actually be rented each month? apartments c. Suppose that a new government is elected that wants to keep out the poor. It declares that the minimum rent that landlords can charge is $2,500 per month. If the government can enforce that price…arrow_forwardWhat does each part of the graph stand for? Assume that a local government imposes a price ceiling of $8, how many units will be excessively supplied/demanded?arrow_forwardNew York City has a long-standing policy of controlling rents in certain parts of the city—in essence,a price ceiling on rent. Is the market for apartmentslikely to be efficient or inefficient? What does thisimply for the size of total surplus?arrow_forward
- Suppose that the government establishes a price ceiling of $3.70 for wheat. What might prompt the government to establish this price ceiling?arrow_forwardFind the equilibrium price and quantity for a product that has the following supply and demand curves, where p is the price in 100's of dollars and q is quantities in 1,000's of units demand: 1/3q + 1/3p - 4=0 Supply: q-p-2=0 If the product is currently priced at $400, what is the quantity supplied and the quantity demanded? Is there a surplus (More supplied than demanded) or a shortage (More demanded than supplied)arrow_forwardAssume the market for one bedroom apartments in a large city has the following demand and supply functions, where R is the monthly rent in dollars and Q is the number of one bedroom apartments: Demand: R = 700 – Q Supply: R = 100 + 2Q The government imposes a rent ceiling of $400 per month Draw a graph of the market. Be sure to fully and clearly label the graph, including: the Supply and Demand curves (as D and S respectively), Equilibrium Quantity (Q*), Equilibrium Price (R*), Rent Ceiling (Rc), Quantity Demanded with the Rent Ceiling (Qdc) and Quantity Supplied with the rent ceiling (Qsc).arrow_forward
- Suppose the total demand for wheat and the total supply of wheat per month in the Kansas City grain market are as shown below: Suppose government establishes a price ceiling of $3.70 for wheat. What might prompt it to establish this price ceiling? Explain carefully the main effects. Demonstrate your answer graphically.arrow_forwardSome cities impose rent control laws, which are price controls or limits on the price of rental accommodations (apartments, houses, and mobile homes). New York City alone had over two million rent-controlled apartments in the early 1950s, but only about 27,000 as of 2014. Show the effect of a rent control law on the equilibrium rental price and the quantity of N.Y. apartments. Show the amount of excess demand on your supply-and-demand diagram. Consider the market rental dwellings in New York illustrated in the figure to the right. Suppose the maximum rent with New York's laws is p. 1.) Using the point drawing tool, indicate the quantity of rental dwellings demanded and the market rent with the rent control laws. Label this point 'ed.' 2.) Using the point drawing tool, indicate the quantity of rental dwellings supplied and the market rent with the rent control laws. Label this point 'es.' Carefully follow the instructions above, and only draw the required objects. P, rent Q Q, quantity…arrow_forwardConsider a market where the equilibrium price for a good is $17 and the equilibrium quantity is 350 units. Assume that the quantity supplied at an above - equilibrium price is 5 times the equilibrium quantity, and the quantity demanded at the above - equilibrium price is 1/3 the equilibrium quantity. Calculate the surplus in the market at the above - equilibrium price. If necessary, round any intermediate calculations to one decimal place and your final answer to the nearest whole number.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you