Question

Question 8&9 Thanks!!!

Multi-Part Question Suppose that in 2002 the market for rented apartments in Manhattan has the following supply and demand curves: Q: 4000-P QS1000+4P where P is the monthly rent. 1. What is the equilibrium price (rent) for an apartment? How many apartments are built and 2. Now suppose the government imposes rent control, ruling that rents may not rise above $500 3. What is the total deadweight loss (in dollars)? rented out What is the excess demand (shortage) of apartments? In 2003 the population of Manhattan rises by 100, which increases the quantity demanded a S. In the absence of rent control, what would the equilibrium price ad quantity be? What would 6. Suppose the rent control of the previous year is still in place. What is the increase in the any price by 100. What is the new demand curve? be the increase from 2002 to 2003 in the quantity of housing supplied? quantity of housing supplied? What is the excess demand (shortage) of apartments? What is the 7. Based on your answers to 2 and 6, how might rent controls help explain why it is getting harder 8. Suppose no rent control existed, and the equilibrium rent (price) prevailed. What would be the 9. Suppose rents continued to grow at this rate. How many years would it take for rents deadweight loss? and harder to find an apartment in Manhattan? percentage growth in rental rates from 2002 to 2003? to double?

Answer 1