2. Consider a competitive market for 'new build' homes. The demand and supply functions for this market are respectively given by: QD = 900-2p 1 Qs = -100 + ) + z P (a) Find the equilibrium Q and p in this market. Suppose the government wants to increase the number of individuals who own a house. They are planning to subsidise transactions in this market to increase Q by 50%. (b) What is the level of subsidy (x) which is required (c) What is the total cost of this subsidy?

2. Consider a competitive market for 'new build' homes. The demand and supply functions for this market are respectively given by: QD = 900-2p 1 Qs = -100 + ) + z P (a) Find the equilibrium Q and p in this market. Suppose the government wants to increase the number of individuals who own a house. They are planning to subsidise transactions in this market to increase Q by 50%. (b) What is the level of subsidy (x) which is required (c) What is the total cost of this subsidy?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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