Suppose the supply of apartments is given by Qs=500+75(P), and demand by Qd=10000-25(P).

Question

What is the equilibrium price and quantity? Suppose a controlled rent of $80 per unit is set. What is the new supply of apartments and what is the shortage/surplus?

Answer 1

500+75p=10000-25p

100p=10000-500= 9500

p=95= equilibrium price

q=500+75(95) = 500+75(95= 500+7125 = 7625 = equilibrium quantity

=10000-25(95=10000- 2375=7625

500+75(80)=500+6000= 6500

10000-25(80)=8000

shortage=8000-6500=1500