Suppose that the demand curve for apartments near the university is given by P = 1000 - Q and the supply curve is given by P = 400 + 2Q
a. Plot a diagram of the market for apartments.
b. Find the equilibrium in the market.
c. Find the consumer surplus, the producer surplus and the total surplus from the market.
d. Suppose that the local government, in an attempt to help the students financially, imposes a price ceiling of $500 on rental apartments. Find the number of apartments that students will be able to rent at that price.
e. Find the excess demand for rental apartments that will arise from the price ceiling.
f. Find the consumer surplus, the producer surplus, the total surplus and the deadweight loss in the presence of the price ceiling.
g. Illustrate with a diagram the market for apartments after the price ceiling is imposed and show on your diagram the excess demand in the market, the consumer surplus, the producer surplus, and the deadweight loss resulting from the price ceiling.