The following table gives hypothetical data for the quantity of two-bedroom rental apartments demanded and supplied in Peoria, Illinois:
|
Quantity
|
Quantity
|
|
Monthly
|
Demanded
|
Supplied
|
|
Rent
|
(thousands)
|
(thousands)
|
|
$800
|
30
|
10
|
|
$1,000
|
25
|
14
|
|
$1,200
|
22
|
17
|
|
$1,400
|
19
|
19
|
|
$1,600
|
17
|
21
|
|
$1,800
|
15
|
22
|
a. Graph the demand and supply curves.
b. Find the equilibrium price and quantity.
c. Explain briefly why a rent of $1,000 cannot be the equilibrium in this market.
d. Suppose a tornado destroys a significant number of apartment buildings in Peoria, but doesn't affect people's desire to live there. Illustrate on your graph the effects on equilibrium price and quantity.