Question

1.suppose the market demand and market supply for apartments in the city of Edmonton are given by the following functions:
Qd = 5000 - 3p
Qs = 1000 + p
a) at what price does the market for apartments in the city clear? how many apartments are rented at this price?
b) suppose the city sets a maximum rent at Rm 1,200.iilustrates the rent control in a supply and demand diagram.is there a shortage? if so,what is the excess demand?
c) at what price does the market for apartments in the city clear? how many apartments are rented at the price?

Answer 1

Answer to Question #70661 - Economics / Economics of Enterprise

Question:

suppose the market demand and market supply for apartments in the city of Edmonton are given by the following functions:

$$Q_d = 5000 - 3p$$ $$Q_s = 1000 + p$$

a) at what price does the market for apartments in the city clear? how many apartments are rented at this price?

b) suppose the city sets a maximum rent at Rm 1,200. illustrates the rent control in a supply and demand diagram. Is there a shortage? if so, what is the excess demand?

c) at what price does the market for apartments in the city clear? how many apartments are rented at the price?

Solution:

a) at what price does the market for apartments in the city clear? how many apartments are rented at this price?

$$5000 - 3p = 1000 + p$$ $$p + 3p = 5000 - 1000$$ $$4p = 4000$$ $$p = 1000$$ $$Q = 5000 - 3 \times 1000 = 2000$$

Answer: the market for apartments in the city clear at price 1000. Quantity of apartments rented at this price is 2000.

b)

Answer: at price of Rm 1200 there is no shortage of apartments. At this price Qs=2200, Qd=1400.

Question (c) repeats the question (a).

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