Q = A(P-0.10)(I0.2)N where Q is the number of rental units demanded, A is a constant, P is the rental price per month, I is the income of the relevant population, and N is the number of family units in the relevant population. Assume that a substantial set of new apartments has just been completed. The new apartments will cause the quantity supplied of rental apartments to be one percent greater than the quantity demanded at current levels of P, I, and N. No further changes to the apartment supply are expected and the supply curve can be considered completely inelastic (vertical supply curve or supply elasticity equal to zero) so that adjustment to the new equilibrium must occur entirely from changes in the quantity demanded.
a. If I and N remain constant, what percentage change in price would be necessary to bring the market back into equilibrium?
b. If P and N remain constant, what percentage change in income would be necessary to bring the market back into equilibrium?
c. If P and I remain constant, what percentage change in the number of family units would be necessary to bring the market back into equilibrium?