Access Demand for Apartments and Profit Maximizing Price
Not what you're looking for?
1. Recent increases in rents has lead the citizens of Elmville to vote in a rent ceiling of $1200. Assuming all rental units in Elmville are identical and the supply and demand for rental units are given by
Qs = -1000 + 20P
Qd = 50000 - 10P
What will be the excess demand for apartments once the price ceiling is implemented?
2. Joe's Barber Shop has a daily total cost function of
TC = 100+ 4Q + Q^2
and the daily demand for his services is
Q = 50 - 2P
What is the profit maximizing price that Joe should charge for his services?
Purchase this Solution
Solution Summary
There are two problems. Solution to first problem calculates the excess demand if price ceiling is implemented. Solution to second problem calculates profit maximum price level.
Solution Preview
1. Let us first find equilibrium rent.
Put Qd=Qs
50000-10P=-1000+20P
51000=30P
P=$1700
Rent ceiling of $1200 is definitely below the equilibrium rent ...
Education
- BEng (Hons) , Birla Institute of Technology and Science, India
- MSc (Hons) , Birla Institute of Technology and Science, India
Recent Feedback
- "Thank you"
- "Really great step by step solution"
- "I had tried another service before Brain Mass and they pale in comparison. This was perfect."
- "Thanks Again! This is totally a great service!"
- "Thank you so much for your help!"
Purchase this Solution
Free BrainMass Quizzes
Pricing Strategies
Discussion about various pricing techniques of profit-seeking firms.
Economic Issues and Concepts
This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.
Elementary Microeconomics
This quiz reviews the basic concept of supply and demand analysis.
Basics of Economics
Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.
Economics, Basic Concepts, Demand-Supply-Equilibrium
The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.