Explore BrainMass
Share

Explore BrainMass

    equilibrium price/output solution

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    The local government in a west Coast college town is concerned about a recent explosion in apartment rental rates for students and other low-income renters. To combat the problem, a proposal has been made to institute rent control that would place a $900 per month ceiling on apartment rental rates. Apartment supply and demand conditions in the local market are

    Qs = -400+2P (Market Supply)
    Qd=5600-4P (Market Demand)

    Where Q is the number of apartments and P is monthly rent.

    A. Graph and calculate the equilibrium price/output solution. How much consumer surplus,producer surplus, and social welfare is produced at this activity level?
    B. Use the graph to help you algebraically determine the quantity demanded, quantity supplied, and shortage wih a $900 per month ceiling on apartment rental rates.
    C. Use the graph to help you algebraically determine the amount of consumer and producer surplus with rent control.
    D. Use the graph to help you algebraically determine the change in social welfare and deadweight loss in consumer surplus due to rent control.

    © BrainMass Inc. brainmass.com October 9, 2019, 7:21 pm ad1c9bdddf
    https://brainmass.com/economics/general-equilibrium/equilibrium-price-output-solution-115403

    Solution Preview

    A. Graph and calculate the equilibrium price/output solution. How much consumer surplus,producer surplus, and social welfare is produced at this activity level?
    From the graph, the two lines intersect clearly at P = 1000.
    AT P = 1000, Q = -400+2*100 = 1600
    Therfeore, the equilibrium quantity ...

    Solution Summary

    This job helps to find equilibrium price/output solution.

    $2.19