p=1500-0+ where Y is the median annual income of the people involved in this mar

Question

p=1500-0+ where Y is the median annual income of the people involved in this market, Q is quantity, and p is the rental price. The inverse supply function is 40 Q Y Derive the equilibrium price, p, and the quantity, Q", in terms of Y The equilibrium quantity, Q*, is 0% 1200 +0004Y The equilibrium price. p' is p's 300+0.021 Use a supply-and-demand analysis to show the effect of decreased income on the equilibrium price of rental homes That is find p dY dp -Q Enter a numeric response using area number rounded to thee decrmal paes) Enter your answer in the answer box and then click Check Answ parts remaining

Explanation / Answer

a). Solution :- At an equilibrium, 1500 - Q + Y / 40 = Q / 4 + Y / 50

1500 - Q - Q / 4 = Y / 50 - Y / 40

1500 - 1.25 Q = 0.02 Y - 0.025 Y

1500 - 1.25 Q = (-) 0.005 Y

1500 - 1.25 Q + 0.005 Y = 0

1.25 Q - 0.005 Y - 1500 = 0

1.25 Q = 1500 + 0.005 Y

Dividing the above equation by 1.25

Q* = 1200 + 0.004 Y

P* = 300 + 0.021 Y

Conclusion :-

b) Solution :- dp / dy = 0.021

Due to decrease in the median income, Equilibrium home rental price will also decrease.

Equilibrium quantity (q*) 1200 + 0.004 Y Equilibriun price (p*) 300 + 0.021 Y

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