Consider a competitive market for apartments, What would be the effect on the eq

Question

Consider a competitive market for apartments, What would be the effect on the equilibrium output and price after the following changes (other things held equal), In each case, explain your answer using supply and demand.
1- A rise in the income consumers

2- A $10 per-month tax on apartment rentals.
3- A new construction technique allowing apartment to be built at half the cost. Consider a competitive market for apartments, What would be the effect on the equilibrium output and price after the following changes (other things held equal), In each case, explain your answer using supply and demand.
1- A rise in the income consumers

2- A $10 per-month tax on apartment rentals.
3- A new construction technique allowing apartment to be built at half the cost. Consider a competitive market for apartments, What would be the effect on the equilibrium output and price after the following changes (other things held equal), In each case, explain your answer using supply and demand.
1- A rise in the income consumers

2- A $10 per-month tax on apartment rentals.
3- A new construction technique allowing apartment to be built at half the cost.

Explanation / Answer

1) A rise in the income of consumers will increase the demand for better options and price for such apartments will increase. Some factors need to be considered here such as occupancy rate, total supply and whether it is an normal good, luxury good or inferior good.

2) A higher percentage of tax in compariosn with rental amount will dissuade consumers and demand wll fall for the apartments and so will be the price.

3) A construction technique which will allow an apartment to built at half the cost will lower the price for the consumers and this will raise the demand for apartments.

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