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The city of Greenville is concerned about rising rent for low-income households. Several policies being considered. Suppose there are a large number of construction companies, each with the identical cost function for building low-cost houses TC = 2500 + 400q +q2 where q is the number of low-cost houses a firm builds.
a. In the absence of any government intervention, what will be the long run price of low-cost houses and the quantity built by each construction company?
b. (Inverse) demand for low-cost housing is given by P = 1000 Q. How many low-cost houses will be built in total? How many firms will serve the market?
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