Eliminate excess demand at the ceiling price

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Reference no: EM13974707

In a crowded city far away, the civic authorities decided that rents were too high. The long-run supply function of two-room rental apartments was given by q = 17 + 4p and the long-run demand function was given by q = 304 – 5p, where p is the rental rate in crowns per week. The authorities made it illegal to rent an apartment for more than 27 crowns per week. To avoid a housing shortage, the authorities agreed to pay landlords enough of a subsidy to make supply equal to demand. How much would the weekly subsidy per apartment have to be to eliminate excess demand at the ceiling price?

a. 5.50 crowns

b. 8 crowns

c. 11 crowns

d. 22 crowns

e. 16.50 crowns

Reference no: EM13974707

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