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# Access Demand for Apartments and Profit Maximizing Price

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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?

https://brainmass.com/economics/demand-supply/access-demand-apartments-profit-maximizing-price-405277

#### 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 ...

#### 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.

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