Consider the attached graph showing the supply and demand for rental apartments around the UH. campus. If the government were to subsidize housing by $1000 per unit per month, then the quantity of rental apartments would____ (increase or decrease) by____ thousand units. The rental price received by landlords inclusive of the subsidy would ____(increase or decrease) by_____ dollars per month while the price paid by tenants, net of the subsidy, would____ (increase or decrease) by____ dollars per month

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
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Chapter1: Making Economics Decisions
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Consider the attached graph showing the supply and demand for rental apartments around the UH. campus. If the government were to subsidize housing by $1000 per unit per month, then the quantity of rental apartments would____ (increase or decrease) by____ thousand units. The rental price received by landlords inclusive of the subsidy would ____(increase or decrease) by_____ dollars per month while the price paid by tenants, net of the subsidy, would____ (increase or decrease) by____ dollars per month
**Graph Title:** U.H. Rental Market

**Description:**
The graph illustrates the rental market dynamics for apartments in a specified area.

**Axes:**
- The vertical axis (Y-axis) represents the "Rent Per Month," measured in dollars, ranging from $0 to $2000.
- The horizontal axis (X-axis) represents the "Apartments (thousands)," indicating the quantity of apartments, ranging from 0 to 40.

**Lines:**
- **Demand Curve:** This downward-sloping line demonstrates the inverse relationship between the rent price and the quantity of apartments demanded. As the price decreases, the demand for apartments increases.
- **Supply Curve:** This upward-sloping line shows the positive relationship between the rent price and the quantity of apartments supplied. As the price increases, more apartments are supplied.

The intersection of these two curves represents the equilibrium point in the rental market, where the quantity of apartments demanded equals the quantity supplied.
Transcribed Image Text:**Graph Title:** U.H. Rental Market **Description:** The graph illustrates the rental market dynamics for apartments in a specified area. **Axes:** - The vertical axis (Y-axis) represents the "Rent Per Month," measured in dollars, ranging from $0 to $2000. - The horizontal axis (X-axis) represents the "Apartments (thousands)," indicating the quantity of apartments, ranging from 0 to 40. **Lines:** - **Demand Curve:** This downward-sloping line demonstrates the inverse relationship between the rent price and the quantity of apartments demanded. As the price decreases, the demand for apartments increases. - **Supply Curve:** This upward-sloping line shows the positive relationship between the rent price and the quantity of apartments supplied. As the price increases, more apartments are supplied. The intersection of these two curves represents the equilibrium point in the rental market, where the quantity of apartments demanded equals the quantity supplied.
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The government provides a subsidy for housing of $1000 per house per month. We just need demand and supply function of the house apartments. Using two points methods we will calculate the demand and supply equation for apartments and then we will calculate the effect of subsidy on price and quantity. 

 

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