Suppose that the city of Los Angeles is debating between two policies intended to create more affordable 1-bedroom apartments. Currently the demand and supply of apartments is as follows: Quantity Supplied 26,000 24,000 22,000 20,000 18,000 16,000 Rent Quantity Demanded $1600 $1400 $1200 $1000 $800 $600 $400 16,000 18,000 20,000 22,000 24,000 26,000 a) The first policy being considered is instituting a maximum rental price of 1-bedroom apartments at $800. Sketch a graph of the market for 1-bedroom apartments in Los Angeles. Using either different colors or letters to label each of the areas, indicate the effects of the price limit by showing the consumer and producer surplus before and after the new policy as well as any deadweight loss. b) The second policy being considered is a subsidy to builders/suppliers of 1-bedroom apartments of $200 per month. Sketch a graph of the market for 1-bedroom apartments in Los Angeles and indicate the effects of the subsidy on the market. Be sure to show the consumer and producer surplus before and after the new policy as well as any price or quantity changes.

Suppose that the city of Los Angeles is debating between two policies intended to create more affordable 1-bedroom apartments. Currently the demand and supply of apartments is as follows: Quantity Supplied 26,000 24,000 22,000 20,000 18,000 16,000 Rent Quantity Demanded $1600 $1400 $1200 $1000 $800 $600 $400 16,000 18,000 20,000 22,000 24,000 26,000 a) The first policy being considered is instituting a maximum rental price of 1-bedroom apartments at $800. Sketch a graph of the market for 1-bedroom apartments in Los Angeles. Using either different colors or letters to label each of the areas, indicate the effects of the price limit by showing the consumer and producer surplus before and after the new policy as well as any deadweight loss. b) The second policy being considered is a subsidy to builders/suppliers of 1-bedroom apartments of $200 per month. Sketch a graph of the market for 1-bedroom apartments in Los Angeles and indicate the effects of the subsidy on the market. Be sure to show the consumer and producer surplus before and after the new policy as well as any price or quantity changes.

Microeconomics: Principles & Policy

14th Edition

ISBN:9781337794992

Author:William J. Baumol, Alan S. Blinder, John L. Solow

Publisher:William J. Baumol, Alan S. Blinder, John L. Solow

Chapter4: Supply And Demand: An Initial Look

Section: Chapter Questions

Problem 1DQ

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The demand and supply functions for three (03) goods are given as follows: Dx = 100-3Px+Py+3Pz Dy = 80+Px-2Py-Pz Dz = 120+3Px-Py-4Pz Sx = -10+Px Sy = -20+3Py Sz = -30+2Pz The equilibrium prices and quantities of all three goods are: Px= 78.72 Qx= 68.72 Py= 23.66 Qy= 50.98 Pz= 60.42 Qz= 90.84 The government decides to: a) impose a 25% Tax on X b) impose a 5 Rs/unit Tax on Y c) give a 10% subsidy on good z When policies (a,b), (b,c), and (a,b,c) are jointly implemented. Analyze the impact on equilibrium prices and quantities. Which policy choice is best? Why?
The demand and supply functions for three (03) goods are given as follows: Dx = 100-3Px+Py+3Pz Dy = 80+Px-2Py-Pz Dz = 120+3Px-Py-4Pz Sx = -10+Px Sy = -20+3Py Sz = -30+2Pz The equilibrium prices and quantities of all three goods are: Px= 78.72 Qx= 68.72 Py= 23.66 Qy= 50.98 Pz= 60.42 Qz= 90.84 The government decides to: Give a 10% subsidy on good Z. Analyse the impact on equilibrium prices and quantities.
The demand and supply functions for three (03) goods are given as follows: Dx = 100-3Px+Py+3Pz Dy = 80+Px-2Py-Pz Dz = 120+3Px-Py-4Pz Sx = -10+Px Sy = -20+3Py Sz = -30+2Pz The equilibrium prices and quantities of all three goods are: Px= 78.72 Qx= 68.72 Py= 23.66 Qy= 50.98 Pz= 60.42 Qz= 90.84 The government decides to: impose a 25% Tax on X impose a 5 Rs/unit Tax on Y When these above policies are jointly implemented. Analyse the impact on equilibrium prices and quantities.
The demand and supply functions for three (03) goods are given as follows: Dx = 100-3Px+Py+3Pz Dy = 80+Px-2Py-Pz Dz = 120+3Px-Py-4Pz Sx = -10+Px Sy = -20+3Py Sz = -30+2Pz The equilibrium prices and quantities of all three goods are: Px= 78.72 Qx= 68.72 Py= 23.66 Qy= 50.98 Pz= 60.42 Qz= 90.84 The government decides to: impose a 25% Tax on X impose a 5 Rs/unit Tax on Y give a 10% subsidy on good Z. When the above policies are jointly implemented. Analyse the impact on equilibrium prices and quantities.
The demand and supply functions for three (03) goods are given as follows: Dx = 100-3Px+Py+3Pz Dy = 80+Px-2Py-Pz Dz = 120+3Px-Py-4Pz Sx = -10+Px Sy = -20+3Py Sz = -30+2Pz The equilibrium prices and quantities of all three goods are: Px= 78.72 Qx= 68.72 Py= 23.66 Qy= 50.98 Pz= 60.42 Qz= 90.84 The government decides to: impose a 5 Rs/unit Tax on Y give a 10% subsidy on good Z. When the above policies are jointly implemented. Analyse the impact on equilibrium prices and quantities.
Suppose there are three types of Apples A, B and C being sold and consumed. The demand and supply equations for each type are: DA = − PA + PB + PC 20 2 4 S A = 4PA − 5DB PA PB PC = 10 + 3 − 5 + 2 SB = 3PB − 7DC PA PB PC = 70 + 4 + 2 − 5 = 5 − 16 SC PC• Determine equilibrium prices and quantities using Cramer’s rule. • Calculate the elasticity of demand for B with respect to prices of variety A, B and C and interpret the economic meaning of the results.
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