1) What is the original equilibrium price and quantity? 2) Effect of greater income or change in tastes shifts the demand curve for rental housing to the right? What does this imply? 3) With change in demand what is the new equilibrium price and equilibrium quantity? 4) Equilibrium at E1 is with or without the government intervention? 5) Govt. imposes a price ceiling to prevent the price from rising. Look in the graph and tell what is the price imposed by ceiling? 6) Since the price is not permitted to rise due to ceiling, the quantity supplied remains at what point? 7) How much is the excess demand or shortage resulting from ceiling? 8) Is the price ceiling shown in the graph above 'binding' or 'non-binding'? Please explain why?

1) What is the original equilibrium price and quantity? 2) Effect of greater income or change in tastes shifts the demand curve for rental housing to the right? What does this imply? 3) With change in demand what is the new equilibrium price and equilibrium quantity? 4) Equilibrium at E1 is with or without the government intervention? 5) Govt. imposes a price ceiling to prevent the price from rising. Look in the graph and tell what is the price imposed by ceiling? 6) Since the price is not permitted to rise due to ceiling, the quantity supplied remains at what point? 7) How much is the excess demand or shortage resulting from ceiling? 8) Is the price ceiling shown in the graph above 'binding' or 'non-binding'? Please explain why?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

(Part 2)
Price (dollars in monthly rent)
$900
$800
$700
$600
$500
$400
$300
$200
$100
0
Price
$400
$500
$600
$700
$800
Do
D₁
E₁
12,000
15,000
17,000
19,000
20,000
E₁
Excess demand
or shortage
from price ceiling
So
10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
Quantity (thousands of rental units)
Price ceiling
set here
Original Original
New
Quantity Quantity Quantity
Supplied Demanded Demanded
18,000
15,000
13,000
11,000
10,000
23,000
19,000
17,000
15,000
14,000
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Explain and illustrate the effects upon price and quantity for each of these five situations relating to the market for high-definition TVs. Draw a separate supply - demand graph for each situation. a. Interest rates on consumer loans increase b. The number of sellers and manufacturers decreases c. The government reduces income taxes upon consumers. d. The number of consumers increases. e. Production costs decrease.