Answer Happy

(a) If the demand curve shifts
downward by $25,000, the equilibrium price of housing is _______
and the equilibrium price of a permit is _____ = ______ minus
__________ .
FIGURE 9-5 Market Effects of Limit on Building Permits Supply with limited permits Initial supply 250 d 200 160 Demand b 80 120 New houses per year If the number of building permits is limited to 80, the supply curve for housing is the kinked curve bcd. The new equilibrium is shown by point d (price of housing = $250,000). Point c shows the marginal cost of production ($160,000). The difference between the price and the marginal cost is the developer's willingness to pay for the building permit ($90,000). Price of housing ($1,000)