Economics: Supply and Demand

USF issues parking permits to allow students to park on campus. The price of the permit is set by college administrators at their discretion, they do not consider market conditions. At the current price, some students complain that there aren't enough spaces for them to park.

Address the following three points in a short essay:

• Describe this situation in economic terms and describe what this implies about the market equilibrium and the price of a parking permit.
• Should the price of a parking permit be raised or lowered to fix this problem? Why? Explain.
• Use the supply and demand model to describe how a graph of the market for parking permits would be affected by a change in price. You must include a graphandreference/describe the graph in your essay.