Consider the real estate rental market in a city, with quantities expressed in hundreds of units and price (P) in currency units. The Supply curve of this market being given by O=100+0.75P and the Demand curve given by D=1,000-0.5P. Ask: a) Calculate prices and equilibrium quantities of this market; b) A market research indicated that the average rent prices in the city are at 800.00. Indicate the consequences of this fact. c) A public manager understood that prices in the rental market should decrease. For this purpose, it implemented a public financing policy for the construction of new properties, so that the new supply curve was: O = 120 + P. In view of this policy, calculate the impacts of this change in supply in relation to the balance found in (a) and in relation to the market situation found in (b). What are your conclusions about the housing market in this city?
Consider the real estate rental market in a city, with quantities expressed in hundreds of units and
Ask:
a) Calculate prices and
b) A
c) A public manager understood that prices in the rental market should decrease. For this purpose, it implemented a public financing policy for the construction of new properties, so that the new supply curve was: O = 120 + P. In view of this policy, calculate the impacts of this change in supply in relation to the balance found in (a) and in relation to the market situation found in (b). What are your conclusions about the housing market in this city?
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