Question

Explain what would happen if there was safety issue of renting the apartments

resulting in the decrease to 7 units? (Show computations) What would be new
equilibrium price and quantity.

Answer 1

When quantity supplied decreases by 7 apartments at each rent, the new supply and demand schedule is given below:

Monthly rent QD QS

400 30 9

450 25 11

500 20 13

550 15 15

600 10 17

So, the new equilibrium price is $550 and quantity is 15.