Question

Figure 1. Market for Rental Apartments in Alpha City $2,000 Supply $1,800 $1,600+ $1,400 + $1,200 + MONTHLY RENT $1,0 +---- $800 $600 $400+ Demand $200 + 0 200 400 600 800 1,000 QUANTITY 1,200 1,400 1,600 1,800 2,000

Answer 1

Tan on Apartments Tan on Watches price paid by $ 1300 $ 1200 : Consmus $ 700 $600 price received by Il producers 'Quantity of its sold / rented 700 units 600 units Total tan revenue collected $ 420,00 $360,000 Deadweight Loss $ 90,00 $ 120,000 from figue 1: market for Rental apartments in Alpha city! Price paid by consmess = $ 1300 Price received by producus = $ 700 Quantity of units sold / rented afte fan 700 hits Totul tau revenne. o Area B t o Area e Now a Area B = ( 700-0) (1300-1000) :... - $ 210,000 Area O e : (700-0) (1000-700) = $ 210,000 Torstal dan neve une = $ 1.210,000+ 210,000) CamScanner. = $ 420,00

Deadweight loss! Area AE + Area AF Area AE = I x base x height Now - Ź X (100- 700) x ( 1300-100) Area AF = S I - $ 45,000 I x base x height Žx (1000-700).* C 100D -70% E) $ 45,000 Now dead weight loss = $ (45,000+45,020) 3 :$ 90,00 fiqure 2! Market for lunury watches in Alpha city! for - Price paid by consmens = $1200 Price received by producers = $ 600 Quantity of mits sold /reated a 600 units Total tan reve me = Area o Bt Area oe Now Ares aB - (690-0) x ( 1200-1000) w Area CB 120,000x (1600-600) Area C e (600-0). (1600-600) $ 240,000 Ics Scanned with CamScanner

. To tal tan reve me collected = $ ( 120,000 + 240, 080) = $ 360,000 Deadweight loss? A Area E t A Area P. Now I Area E= Ž x base x height = I x (10D-600) x (1200-1000) a $ 40,000 A Area F. Į x base x height = { x 11000-600) x (1000-600) = $ 80,000 Total deadweight loss. $140,000 + 80,000) 3$ 120,000 ..csbanned with CamScanner