What is the market equilibrium rental price per month

Reference no: EM13795812

Problem 1:

Below is a production possibilities table for consumer goods (food) and capital goods (machinery). Graph the data using Excel and then answer the following questions.

	A	B	C	D	E	F
FOOD	0	10	20	30	40	50
MACHINES	150	140	120	90	50	0

1. What are the specific assumptions that underlie the production possibilities curve?

2. What would be the cost of more food if the economy is at point C? What would be the cost of producing more machinery? How does the shape of the production possibilities curve reflect the law of increasing opportunity costs?

3. What if this hypothetical economy were producing only 9 food and 130 machines and it was depicted by this production possibilities table and curve, what conclusions could be drawn about this economy's resource utilization?

4. Can this economy produce outside its current production possibilities? How can technological changes affect the production possibilities curve? How can international trade permit consumption above its production possibilities curve?

Problem 2

Evaluate each of the supply and demand scenarios below, answering the following questions:

How will each affect equilibrium price and equilibrium quantity in a competitive market?
Will price and quantity rise, fall, or be unchanged?
Based on the magnitudes of the shifts, will the answers be indeterminate?

Provide an appropriate graph to illustrate each answer (this does not require use of Excel, although you may use it).

a. Demand decreases and supply is constant.

b. Demand increases and supply increases.

c. Supply decreases and demand is constant.

d. Supply increases and demand decreases.

e. Demand increases and supply decreases.

f. Demand decreases and supply decreases.

g. Demand increases and supply is constant.

Note that 'constant' means with no shift while 'increases' or 'decreases' means a shift occurs.

Problem 3:

Suppose that the demand and supply schedules for rental apartments in the city of Gotham are as given in the table below.

Rent	Demand	Supply
2,500.00	10000	15000
2,000.00	12500	12500
1,500.00	15000	10000
1,000.00	17500	7500
500.00	20000	5000

a. What is the market equilibrium rental price per month and the market equilibrium number of apartments demanded and supplied?

b. If the local government can enforce a rent-control law that sets the maximum monthly rent at $1500, will there be a surplus or a shortage? Of how many units? And how many units will actually be rented each month?

c. Suppose that a new government is elected that wants to keep out the poor. It declares that the minimum rent that can be charged is $2500 per month. If the government can enforce that price floor, will there be a surplus or a shortage? Of how many units? And how many units will actually be rented each month?

d. Suppose that the government wishes to decrease the market equilibrium monthly rent by increasing the supply the housing. Assuming that demand remains unchanged, by how many units of housing would the government have to increase the supply of housing in order to get the market equilibrium rental price to fall to $1500 per month? To $1000 per month? To $500 per month?

Reference no: EM13795812

Questions Cloud

Different types of strategies implimented in organisation : How do you determine which type of strategy is most appropriate for your organization?

Discuss the consequences of such a policy to u.s. consumers : If U.S. companies should not be liable, then they could be legally exempt from tort liability. Discuss the consequences of such a policy to U.S. consumers.

How hr strategies will promote a competitive advantage : Identify how your recommended HR strategies will promote a competitive advantage for each company within their industry. Provide a rationale for your position.

General availability of credit : When managers consider the general availability of credit, the level of disposable income, and the propensity of people to spend, they are considering what factors?

What is the market equilibrium rental price per month : How many units of housing would the government have to increase the supply of housing in order to get the market equilibrium rental price to fall to $1500 per month? To $1000 per month? To $500 per month?

Discussions of various religious beliefs : Qualified teachers rarely explain or lead discussions of various religious beliefs, with the result that people often know very little about religions other than their own.

Extent of the separation of church : The debate over the exact extent of the separation of church and state is an ongoing one, often requiring judgments about what is constitutionally permissible by the Supreme Court.

Implementation and communication of a strategic plan : What are examples of regulatory issues that affect the controlling aspect of a strategic plan?

Explain defenses to negligence : Describe the product subject to recall, including the recall date, recall number, and the reason for the recall. Analyze whether the manufacturer would be liable for negligence if the product had not been recalled and had caused harm to a consumer.

User Account

All Pages