Problem 1 Consider the market for the rent of 1-bedroom apartments in Blandy-town. Quantity supplied is given by Qs=0.2*P-70. Quantity demanded is given by Qd=245-(1/4)*P Plot these curves on a graph with 6 points at P=400,500,600,700,800,900

Problem 1 Consider the market for the rent of 1-bedroom apartments in Blandy-town. Quantity supplied is given by Qs=0.2P-70. Quantity demanded is given by Qd=245-(1/4)P Plot these curves on a graph with 6 points at P=400,500,600,700,800,900

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

M5LO1 Identify and show how a price ceiling creates a shortage and inefficiency in the
housing market.
Problem 1
Consider the market for the rent of 1-bedroom apartments in Blandy-town.
Quantity supplied is given by Qs=0.2*P-70.
Quantity demanded is given by Qd=245-(1/4)*P
Plot these curves on a graph with 6 points at P=400,500,600,700,800,900
Problem 2
Refer to problem 1. A law has been passed setting the maximum rent to be $600. What is the
shortage?
Problem 3
Refer to problem 1 and 2. Calculate the deadweight loss caused by the price ceiling.

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