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# practicesolns - Group Exercises Problem 1 Assume 8 people...

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Unformatted text preview: 1/4/11 Group Exercises Problem 1 Assume 8 people want to rent an apartment; reservations prices are: k an. r Eiieervaﬁon 4o 25 30 35 10 18 is 5 W .3 .2 a) Plot the/marke‘ttdemand curve 7 © 8‘ a: b) Assume supply of apartments is ﬁxed 5 units; what is the highest price that would make e market demand equal to 5 units? c) Assume the supply goes up to 6 un 5; what is the range of equilibrium prices? 5) m 0) mm P. /5 [M m) 4 £23Lr6e78® M A: Problem 2 Assume that there are 5 units, but 1 is converted to a condo. Person A decides to buy the condo. ° What is the highest price at which the demand will equal thesupply? / 5 3 ¢aj/ ﬁx" 1/4/11 zzscr5¢~2g 61 Problem3 Suppose that a monopolist owns all 5 of the apartments. Assume that she must charge one price for all apartments. Use the table below to ﬁgure out the price and quantity that the monopolist will choose to maximize revenue. M M /CM wnggﬁo 4: W M 36 gm a/Wmo I«.- Wwws 2%er 1 term“ Problem 4 Suppose that there are 5 apartments and that the city imposed rent control. The maximum rent allowed is \$9. Assume that A, B, C, D, and E get an apartment but F, G, and H are frozen out. a) If subletting is practiced, who will sublet to whom in equilibrium? b) What is the maximum amount that can be charged for the sublet payment? 1/4/11 53) EO/W ﬁlm) W/‘% EWW 74: F (Va/ﬁe (57/?) Problem 5 Suppose that a tax of \$5 was ievied on renters. M a) What is the maximum that renters would be wiEling to pay landlords if they each had to pay a \$5 tax? “3 ‘-" 5 : ‘ﬁ-K‘é‘rﬁff ‘rﬁgaﬁ'mr/a‘reaaa‘tﬁér” >Z\€§&W '7 a Waraa’aﬁaa 9. “(an A afar, "‘{gj u '®§§3épﬂlb§w%lﬁqmgﬁg ﬁgjaﬁﬁa ' v t «a» “Fiﬁ » - (14/ «5, , , Efﬁgy :5» zéaregsﬁf arsrtaﬁaatégé Price hf .3 .2 b) What is the max equilibrium price if 5 a artments are #75 rented (the amount received by the iandiord)? c) How does this compare to what happens if the tax is levied on the landlords? Regrrvrt°""aie 420.726 ‘30 - 6 13 l0 0 (W513 D) W WSW 4; wee/0a WM é/c 5 5mm” (Mr). ”95% M43 WW KW ﬂ‘ 79%" / am (MW: Wet/t m» M,» W W3 , ”J é'mW- Wr/B/Wﬂ/B ...
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practicesolns - Group Exercises Problem 1 Assume 8 people...

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