d. Housing demand is price inealastic, and the price of housing relative to other goods has risen 3. Say there are two types of household: young and old. The young have demand y1 = 10 - p and the old have demand y2 = 10 - p (they are the same until part b). There are 100 young households, and 100 old households. There are 1,000 units of housing supplied to them by landlords (who are also old) who behave in markets as price-takers. The housing market is perfectly competitive a. Say the market is competitive. i. What single price p* would clear the market? ii. How much housing would each household consume? iii. What is the consumer surplus of each individual household, and the total amount? iv. What is the revenue collected by landlords? v. Show all of these quantities on a graph similar to one given in class b. Due to rent control, older households households can pay the price p = 2 for any housing unit i. How much housing do older households consume in housing each? ii. What is the individual and aggregate consumer surplus of older households? iii. What price would clear the market for the young without rent control? iv. How much housing do the young consume? v. What is the individual and aggregate consumer surplus of younger households? vi. How much revenue is collected by landlords? vii. What is the deadweight loss from rent control? viii. Show all of these quantities on a graph similar to one given in class d. Housing demand is price inealastic, and the price of housing relative to other goods has risen 3. Say there are two types of household: young and old. The young have demand y1 = 10 - p and the old have demand y2 = 10 - p (they are the same until part b). There are 100 young households, and 100 old households. There are 1,000 units of housing supplied to them by landlords (who are also old) who behave in markets as price-takers. The housing market is perfectly competitive a. Say the market is competitive. i. What single price p* would clear the market? ii. How much housing would each household consume? iii. What is the consumer surplus of each individual household, and the total amount? iv. What is the revenue collected by landlords? v. Show all of these quantities on a graph similar to one given in class b. Due to rent control, older households households can pay the price p = 2 for any housing unit i. How much housing do older households consume in housing each? ii. What is the individual and aggregate consumer surplus of older households? iii. What price would clear the market for the young without rent control? iv. How much housing do the young consume? v. What is the individual and aggregate consumer surplus of younger households? vi. How much revenue is collected by landlords? vii. What is the deadweight loss from rent control? viii. Show all of these quantities on a graph similar to one given in class
