Question

Ostia 3 The graph bekw represents them for re n aulwn. ont colore per or 0 10 20 (a) What are the equilibrium renan y of hinged pes) Now considerarem elig stat 5600 () What would be the rest pas? Explain pes) (e) Calculate the shortage of rental housing wis pes) Now considerarom inget 300 m (d) How many housing wis would be rented? (e) le) Calculate the housing shortage? pes) ( new be willing to pay for the best What would be the maximum price the of housing anable pes)

Answer 1

Equilibrium is given by equality of demand and suply or graphically by intersection of demand and supply curves

Therefore equilibrium price = 400

Equilibrium quantity = 20  

b) rent ceiling P = 600

Therefore rent would be paid of $ 600

c) At P = 600

Quantity demanded Qd = 10

Quantity supplied Qs = 30  

Since Qs > Qd which means at price P = 600 there exits a surplus equals to 30 - 10 = 20  

d) Rent ceiling P = 300

since rent ceiling is imposed of $ 300 so rent would be paid of $ 300

e) Qd = 30 at rent ceiling P = 300

Qs = 10 at  rent ceiling P = 300

shortage = Qd - Qs = 30 - 10

= 20