3. Consider the Smith family who have the followingdemand for rental housing (q, measured in square feet):q=0.5*(y/p),where y is the Smith family income and p is the price ofhousing per square foot. The Smith's income is $4000 permonth and initially the price of housing is $2 per squarefoot per month.a. If the Smiths are operating on their demand curve, howmuch housing are they consuming?b. How much is the Smith family's monthly rent? Howmuch does the Smith family spend on otherconsumption?c. Starting from the initial equilibrium, the governmentnow grants the Smiths a proportional rent subsidy withB=0.5. How much housing does the Smith familypurchase given the subsidy?d. What is the gross market rent per month paid by theSmith family? What is the net rent (after deductingthe subsidy) paid by the Smith family? How muchdoes the Smith family spend on other consumption inits new equilibrium?e. What is total dollar outlay of the government for theSmith's housing subsidy per month?

DISCLAIMER “Since you have asked multiple questions, we will answer the first three questions. If…

3. Consider the Smith family who have the following demand for rental housing (q, measured in square feet): q=0.5*(y/p), where y is the Smith family income and p is the price of housing per square foot. The Smith's income is $4000 per month and initially the price of housing is $2 per square foot per month. a. If the Smiths are operating on their demand curve, how much housing are they consuming?

3. Consider the Smith family who have the following demand for rental housing (q, measured in square feet): q=0.5*(y/p), where y is the Smith family income and p is the price of housing per square foot. The Smith's income is $4000 per month and initially the price of housing is $2 per square foot per month. a. If the Smiths are operating on their demand curve, how much housing are they consuming?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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