The table shows the demand supply schedules fix oncampus hou

The table shows the demand supply schedules fix on-campus housing. If the college puts a rent ceiling on rooms of $750 a month, rent is $ and the number of rooms rented is . The on-campus housing market is .

Solution

It is a problem on demand and supply of room on rent. Quantity demanded is inversly related with rent and supply is directly related with it. Thus if you draw a diagram showing relation between room rent and demand and room rent and supply, then they will intersect at rent of $600. It is equilibrium rent as demand and supply both are 2,000.

Here a celing of $750 room rent has been imposed. At this rent there is a demand for 1,250 room while supply is 2000 room. Thus supply exceeds demand. In this situation 1,250 rooms will be rented. Remaining 750 rooms will remain vacant. On the basis of this information following points are answered-

Rent is $750 a month and the number of rooms rented is 1,250.

On campus housing market is disequilibrium. Supply of room exceeds demand by 750.