Microeconomics

Running head: MICROECONOMICS
Microeconomics
Name of the student
Name of the University
Author Note

1MICROECONOMICS
Table of Contents
Answer 2:...................................................................................................................................2
Answer 3:...................................................................................................................................4
References:.................................................................................................................................6

2MICROECONOMICS
Answer 2:
450 500 550 600 650 700 750
0
500
1000
1500
2000
2500
3000
Quantity demanded (rooms) Quantity suplied (rooms)
a.
The government imposes a rent ceiling of $650 while the equilibrium amount of rent
is $ 600. This cannot affect the low-cost housing market, as rent will remain at $600 per
month (Hatfield, Plott and Tanaka 2016). At this price, 2000 rooms will be rented and the
housing market can be formed efficiently.
b.
When government enforces a rent ceiling at $550, it goes down the equilibrium price
and at this situation 2000 room will be provided for rent. However, the market will
experience a shortage of rooms and consequently, the low-cost housing market will work
inefficiently.
c.
In black market, price of a room is determined by the maximum amount that a person
wants to pay for the last room. A person wants to pay $600 for 2000 rooms