1. Using the given functions, draw a corresponding demand curve and a supply curve. Properly label the equilibrium price and quantity. Then show what will happen to equilibrium if the City Council imposes a price ceiling at 16.

1. Using the given functions, draw a corresponding demand curve and a supply curve. Properly label the equilibrium price and quantity. Then show what will happen to equilibrium if the City Council imposes a price ceiling at 16.

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

l Verizon
10:55 PM
ncuone.ncu.edu
Instructions
Assume that the City Council in Prescott,
Arizona is considering implementing price
ceilings on rental units based on the number of
bedrooms in the unit. The demand function for
rental units (on a single bedroom equivalent
basis) is given by Qp = 120 – 4P and the
supply function is given by Qs = 2P, where P is
price and Q is quantity. The Council is
considering imposing a ceiling price on rental
units of Pmax = 16.
1. Using the given functions, draw a
corresponding demand curve and a supply
curve. Properly label the equilibrium price and
quantity. Then show what will happen to
equilibrium if the City Council imposes a price
ceiling at 16.
NOTE: There are numerous guides online that
demonstrate how to draw supply and demand
curves; most are done in Excel. To create the
demand curves that you need for this
assignment, create an Excel file with a price
column, including prices from $1 to $30. Using
the formulas, compute the quantity demanded
at each price and quantity supplied for each
price. Then copy and paste the graph into your
Word document where you will write out

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