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Question: The market demand and supply for 3-bedroom houses in a small town per annum are summarised by the following relationships, where Q is the number of houses
Demand = $500,000 - $8,000Q
Supply = $400,000 + $12,000Q
i) What will be the market price and annual number of sales at equilibrium? (Hint: use a spreadsheet to calculate the expected supply and demand prices when Q = 1, 2, 3, etc, and identify when the calculated prices are equivalent).
ii) What is more elastic, demand or supply? Show calculations.
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