The rent control agency of New York City has found that aggregate demand is Q = 160 - 8P. Quantity is measured in tens of thousands of apartments. Price, the average monthly rent, is measured in hundreds of dollars. The aggregate supply is Q = 70 + 7P. a) What is an equilibrium price of rental apartment? b) Suppose the agency sets a maximum monthly rent to $ 300, are there excess demand or excess supply of apartments? If so, by what amount? Please show your work with an explanation. Suppose the agency bows to the wishes of the board and sets a rental of $900 per month on all apartments to allow landlords a "fair" rate of return. If 50% of any long-run increases in apartment offerings come from new construction, how many apartments are constructed?

The rent control agency of New York City has found that aggregate demand is Q = 160 - 8P. Quantity is measured in tens of thousands of apartments. Price, the average monthly rent, is measured in hundreds of dollars. The aggregate supply is Q = 70 + 7P. a) What is an equilibrium price of rental apartment? b) Suppose the agency sets a maximum monthly rent to $ 300, are there excess demand or excess supply of apartments? If so, by what amount? Please show your work with an explanation. Suppose the agency bows to the wishes of the board and sets a rental of $900 per month on all apartments to allow landlords a "fair" rate of return. If 50% of any long-run increases in apartment offerings come from new construction, how many apartments are constructed?

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

The rent control agency of New York City has found that
aggregate demand is Q = 160 - 8P. Quantity is
measured in tens of thousands of apartments. Price, the
average monthly rent, is measured in hundreds of
dollars. The aggregate supply is Q = 70 + 7P. a)
What is an equilibrium price of rental apartment? b)
Suppose the agency sets a maximum monthly rent to $
300, are there excess demand or excess supply of
apartments? If so, by what amount? Please show your
work with an explanation. Suppose the agency bows to
the wishes of the board and sets a rental of $900 per
month on all apartments to allow landlords a "fair" rate
of return. If 50% of any long - run increases in apartment
offerings come from new construction, how many
apartments are constructed?

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