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The market for apartments was captured by a monopolist who charges high rents to some renters, leading many renters to complain to their local government. The city council in response decides to implement a price ceiling on apartments of $500. Demand in this market is represented by the

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Answer:

  1. 70 units
  2. $700

Explanation:

1. The demand curve is given and the price is given as well. Substitute the price ceiling into equation.

P = 1,200 - 10q

500 = 1,200 - 10q

q = (1,200 - 500 ) / 10

q = 70 units

2. If there was no price ceiling and 50 units, market price would be;

P = 1,200 - 10 * 50 apartments

P = $700

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