Question

In an effort to beautify their neighborhood, four households are considering leasing a small section of vacant land for a park. For a monthly leasing fee, the owner of the vacant land is willing to arrange for some of the maintenance and to make the park available only to the four households. The demand curves for the four households (A, B, C, and D) wanting parkland are as follows (all demand curves are linear):

Answer 1

The concept of rent control and market equilibrium in rental housing is discussed, showing how increases in demand lead to higher prices and an increased quantity of rental units available.

Step-by-step explanation:

The question is centered on the concept of rent control and how changes in demand can impact the rental housing market. Initially, the equilibrium point (Eo) at the intersection of the supply curve (So) and the demand curve (Do) reflects an equilibrium price of $500 and 15,000 rental units. When certain factors like higher incomes or changing tastes occur, there is a rightward shift in the demand curve (from Do to D1), leading to a new equilibrium (E1) where the rental price increases to $600 and the quantity of available rental units rises to 17,000. These dynamics illustrate the relationship between shifting demand and outcomes in the market for rental housing.