The Hong Kong Government adopted certain measures to suppress the "speculation" on the properties (apartments) in Hong Kong.Let's assume these measures effectively decrease the "Demand for Properties for Sales" in Hong Kong.Then, we have the following observations:

"Despite the decrease in the "Demand for Properties for Sales," we cannot observe a significant drop in the market price of Hong Kong properties, but we can observe a sharp reduction in the quantity transacted in the market."

Question:

a) Use the Demand-Supply framework with graph(s) to explain the above observations.Please be careful with the reasonableness of the assumptions you used for the characteristics of the demand curve and supply curve. (8 points)

At the same time, we also observe:

"The rental market of apartments in Hong Kong becomes very "hot" in terms of a significant increase in quantity transacted."

Question:

b) Use the Demand-Supply framework with graph(s) to explain the above observations.Please be careful with the reasonableness of the assumptions you used for the characteristics of the demand and supply curves. (8 points)

Another observation:

"In Hong Kong's apartment rental market, the tenants and the landlords usually split the real-estate agency fee (each pays half of the monthly rental price).On the other hand, in some cities, the tenants pay the entire agency fee, e.g. in Beijing."

Question:

c) So in Beijing, the landlords get the real-estate agency service for free, while the practice in Hong Kong is fair as the tenants and landlords share the agency fee. Do you agree with the above statement? Explain. (10 points)

*Real-estate agency fee is the fee charged by the real-estate agents for their services provided.