Group+3+Price+Controls

=Week 3: Price Controls=

= Assume that the demand and supply for apartments in Washington, DC are defined by the following equations: =

Q S = -30 + 3 P   Q D = 300 - ⅓ P  a. Provide a graph of the market for apartments, making sure to label key points. b. What is the equilibrium price and quantity of apartments in the market? c. Assume that the government sets a maximum price of $225.00 for apartments in Washington, DC to ensure the availability of low-income housing. What is the effect on the market for apartments (i.e. what is the new equilibrium price and quantity)? Who benefits from the policy and who loses?

__**Tremaine Johns**__ b. What is the equilibrium price and quantity of apartments in the market?

The equilibrium price of apartments in the market is $141. The equilibrium quantity of apartments in the market is 394.

c. Assume that the government sets a maximum price of $225.00 for apartments in Washington, DC to ensure the availability of low-income housing. What is the effect on the market for apartments (i.e. what is the new equilibrium price and quantity)? Who benefits from the policy and who loses?

By setting a price ceiling at $225, there will be no effect on the market for apartments. The ceiling is higher than the current equilibrium price; therefore, the equilibrium price and quantity remains the same.   