Suppose that in the rental market for apartment units the monthly demand by low-income (poor) consumers is given by P=1000-2Q, where Q is the number of units. The marginal private cost of maintaining the units by the landlords is a constant $500 per unit per month. Suppose that low- income consumers are eligible for subsidized rent. Landlords renting units to low-income consumers receive a subsidy from the government of $250 per unit per month to cover the difference between the normal market rent on the units and the subsidized rent paid by the eligible poor. Using a graph with dollars on the vertical axis and Q on the horizontal axis, answer the following questions: 42. What is the deadweight loss of the subsidy at the market equilibrium? $ Now suppose the demand for housing by the poor generates external benefits to the non-poor in society. Suppose the marginal external benefit curve is given by MEB-250. 43. With the subsidy of $250 in the presence of the external benefit, the deadweight loss in the market will be $ 44. The subsidy will cost the government a total of $

Suppose that in the rental market for apartment units the monthly demand by low-income (poor) consumers is given by P=1000-2Q, where Q is the number of units. The marginal private cost of maintaining the units by the landlords is a constant $500 per unit per month. Suppose that low- income consumers are eligible for subsidized rent. Landlords renting units to low-income consumers receive a subsidy from the government of $250 per unit per month to cover the difference between the normal market rent on the units and the subsidized rent paid by the eligible poor. Using a graph with dollars on the vertical axis and Q on the horizontal axis, answer the following questions: 42. What is the deadweight loss of the subsidy at the market equilibrium? $ Now suppose the demand for housing by the poor generates external benefits to the non-poor in society. Suppose the marginal external benefit curve is given by MEB-250. 43. With the subsidy of $250 in the presence of the external benefit, the deadweight loss in the market will be $ 44. The subsidy will cost the government a total of $

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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