Assume the figure to the right illustrates the market for houses for sale in a small city. Suppose the market price of houses is $225,000. How large will the resulting surplus be? At a price of $225,000, there will be surplus houses. (Enter your response as a whole number.) What is the equilibrium price of houses? The equilibrium price is $ . (Enter your response as a whole number.)
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A surplus occurs when the quantity supplied is greater than the quantity demanded. In this case, at a price of $225,000, if there are more houses for sale (supply) than people want to buy (demand), there will be a surplus of houses. Unfortunately, without the Show more…
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Suppose that there are 1,000 one-bedroom apartments in a small town and that this number is fixed. The table gives the quantity demand in the market for one-bedroom apartments. Price (Rent per month) Demand (Apartment units) $500 1,600 $600 1,400 $700 1,200 $800 1,000 $900 800 $1,000 600 $1,200 400 (a) What is the equilibrium rental for a one-bedroom apartment? (b) Suppose 200 new one-bedroom apartments are constructed. What happens to the equilibrium rent? (c) Suppose more people move into the town, increasing the demand for one-bedroom apartments by 200 units at each price. What is the new equilibrium price? (Assume the supply remains fixed at 1,200 units).
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