8 Consider A Perfectly Competitive Market For Rental Housing The Monthly Inverse Demand And Supply Functions For Ren 1 (33.69 KiB) Viewed 101 times
8 Consider A Perfectly Competitive Market For Rental Housing The Monthly Inverse Demand And Supply Functions For Ren 2 (12.53 KiB) Viewed 101 times
8 Consider A Perfectly Competitive Market For Rental Housing The Monthly Inverse Demand And Supply Functions For Ren 3 (12.5 KiB) Viewed 101 times
8. Consider a perfectly competitive market for rental housing. The monthly (inverse) demand and supply functions for rental units are given by: P = 45 -0.509&P= 5 +0.30s, where P is a monthly rent, and Q is quantity of rental units. a) In the supply/demand model, what do the inverse supply and demand functions represent, respectively? Explain its underlying factor(s). [2pts] b) What results in the Total Benefit derived and Total Cost incurred at the specific market quantity exchanged in a market? [2pts) c) With the given functions above, derive the demand and supply functions. Also, plot the supply and demand functions in the diagram below. [3pts]
6) Now suppose the market price is set at 70% of the equilibrium price in part d). Determine the new market quantity exchanged, the size of shortage, CS, PS and DWL under this price. [5pts]
d) Compute the equilibrium price (P+) and quantity (Q*). Show them in the diagram. [2pts] e) Compute the MC, TB and TC at Qin part (d). [3pts)
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