Consider the market for different Apartments. Use the chart below to answer the following questions. Demand and Supply Schedules Buyer Willingness to Pay Seller Willingness to Sell Olivia $800 Ted $800 Michael $1,000 Paula $1,000 Kristen $1,200 Chris $1,200 Amy $1,400 Ryan $1,400 Steve $1,600 Karen $1,600 1. Using the table above draw out the respective demand and supply curves for the buyers and sellers (remember: each buyer and seller represents 1 quantity) 2. At an equilibrium price of $1,300, label the areas for both consumer and producer surplus on the graph 3. Calculate the consumer and producer surplus as well as the total surplus areas on the graph [Sum the individual surpluses buyers face then do the same for sellers] 4. Michael argues that he is not able to live in the area at the given equilibrium price of $1,200 and he is successful in getting a price ceiling implemented at $800, what happens to producer and consumer surplus as a result of this change? 5. Of the different buyers and sellers, who is made worse off by such a price ceiling from part 4 based on their willingness to pay/willingness to sell at this new price?
Consider the market for different Apartments. Use the chart below to answer the following questions.
|
Demand and Supply Schedules |
|||
|
Buyer |
Willingness to Pay |
Seller |
Willingness to Sell |
|
Olivia |
$800 |
Ted |
$800 |
|
Michael |
$1,000 |
Paula |
$1,000 |
|
Kristen |
$1,200 |
Chris |
$1,200 |
|
Amy |
$1,400 |
Ryan |
$1,400 |
|
Steve |
$1,600 |
Karen |
$1,600 |
1. Using the table above draw out the respective demand and supply
2. At an
3. Calculate the consumer and producer surplus as well as the total surplus areas on the graph [Sum the individual surpluses buyers face then do the same for sellers]
4. Michael argues that he is not able to live in the area at the given equilibrium price of $1,200 and he is successful in getting a
5. Of the different buyers and sellers, who is made worse off by such a price ceiling from part 4 based on their willingness to pay/willingness to sell at this new price?
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