How many apartments are rented

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The rent control agency of Rochester has found that aggregate demand is P = 500 - 5QD. Quantity, QD, is measured in thousands of apartments. Price, P, equals the monthly rental rate in dollars. The city's board of realtors acknowledges that this is a good demand esti- mate and has shown that supply can be expressed as P = 5QS.

a. If the agency and the board are right about demand and supply, respectively, what is the free-market price? How many apartments are rented?

b. If we assume an average of three persons per apartment, what is the expected change in city population if the agency sets a maximum average monthly rent of $100 and all those who cannot find an apartment leave the city?

Reference no: EM13921846

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