Consider a college town in which four identical apartments are available for rent. There are eight students interested who have the following maximum willingnesses to pay: person Andy Boris Claire Doris Edward Florence Gloria Hank max. willingness to pay () 380,- 150,- 250,- 410,- 145,- 350,- 160,- 120,- 1. Draw the demand and supply curves in a suitable diagram. What will be the equilibrium rent in a competitive market? Explain your result! 2. Will the landlords be able to increase their earnings if they can meet binding agreements with each other? 3. Suppose again that the landlords collaborate with each other and furthermore that they know the exact reservation prices of the interested students. Sub-renting can be prevented. What will be the resulting allocation? Compare it with the competitive equilibrium! 4. Suppose that the landlords are price takers. The government decides to introduce a rent ceiling. What will be the allocation if the landlords are allowed to charge a maximum rent of 155,-? 5. Which of the allocations discussed are Pareto-efficient? Show how Pareto-improvements can possibly be achieved! Consider a college town in which four identical apartments are available for rent. There are eight students interested who have the following maximum willingnesses to pay: person Andy Boris Claire Doris Edward Florence Gloria Hank max. willingness to pay () 380,- 150,- 250,- 410,- 145,- 350,- 160,- 120,- 1. Draw the demand and supply curves in a suitable diagram. What will be the equilibrium rent in a competitive market? Explain your result! 2. Will the landlords be able to increase their earnings if they can meet binding agreements with each other? 3. Suppose again that the landlords collaborate with each other and furthermore that they know the exact reservation prices of the interested students. Sub-renting can be prevented. What will be the resulting allocation? Compare it with the competitive equilibrium! 4. Suppose that the landlords are price takers. The government decides to introduce a rent ceiling. What will be the allocation if the landlords are allowed to charge a maximum rent of 155,-? 5. Which of the allocations discussed are Pareto-efficient? Show how Pareto-improvements can possibly be achieved