Question 1 Consider ten students who think about rent- ing an inner ring (IR) apartment in College Town. Their reservation prices (in no particular order) are 250, 280, 300, 420, 240, 380, 260, 440, 480, and 400, respec- tively. Suppose the supply of IR apartments is fixed at N = 6, and all landlords have reservation prices of zero. a) Plot an ordered list of the students' RPs in a diagram. b) Plot the (inverse) market demand curve, and the (inverse) market supply curve in a diagram. Explain why your plot in a) is identical (except for the labelling of the vertical axis) to your demand plot in b). c) Find the market equilibrium. How many IR apartments are rented out in a competitive equilibrium? To whom? At which price(s)? Explain.
Question 1 Consider ten students who think about rent- ing an inner ring (IR) apartment in College Town. Their reservation prices (in no particular order) are 250, 280, 300, 420, 240, 380, 260, 440, 480, and 400, respec- tively. Suppose the supply of IR apartments is fixed at N = 6, and all landlords have reservation prices of zero. a) Plot an ordered list of the students' RPs in a diagram. b) Plot the (inverse) market demand curve, and the (inverse) market supply curve in a diagram. Explain why your plot in a) is identical (except for the labelling of the vertical axis) to your demand plot in b). c) Find the market equilibrium. How many IR apartments are rented out in a competitive equilibrium? To whom? At which price(s)? Explain.
Chapter5: Supply, Demand, And Price: Applications
Section5.7: Application 7: Why Do Colleges Use Gpa,s Actss, And Sats, For Purposes Of Admission?
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