Question

A city the has the following market equilibrium for rental apartments. Use the graph to answer the questions below Market for Rental Apartments Price 5315 500 1000 3400 Quantity et Rental Units (1) Find consumer surplus and the producer surplus that exist at the equilibrium rent of SS3 Is there a deadweight loss? Find if a * Consumer Surplus - Total art of A, B and C & Producer Supples = Totul ano of D, E, F * There is no dead weight loss in) Find consumer surplus and the producer surplus that exist at the rent 55353s there a deadweight loss? Find any

Answer 1

3152 ) 10.0%) 500 1000 1400 Consumer Surplus = Area of a triangle Zyu - Area of A + B + c = I x Base x height = 4 x (72)x(YU) 4 x 1545-525) x 1000 = 10000 Tos = $10000

- liw Producer Surphes Area of a triangle X yo - Area of Ft DTE - ļx Base x height - $ * (**) * (YU) á 1525) (1000) = 262500 (11) [pos = $262500) There i No deadweight loss Because there is no disation in the markel- - Rent = $535 consumer suples - Area of a triangle ZWB - Area of dx ose xheigte 74x1ZW) (WB) = x(545-535) (500) - 2500 Icis = $2.500]

i produces suples - Area of Region X WQT - Area of B & D F F - Area of Region X WQT - Area of a triangle Xu meege ľ mnogle rectangle WQ UT = { x (315) (500) + 500x 1535- 315) - 78750 + 110000 188750 Tp.s= $188750 ] cm Deadweight loss = Area of a tringle Qut 1. = Area of C, E ELX QI XUI = £ x 1535-315) (1000-500) DWL = $55000 = 'Area of C, E = 55000