In a Crowded City Far Away, the Civic Authorities Decided

question 1

Multiple Choice

In a crowded city far away, the civic authorities decided that rents were too high. The long-run supply function of two-room rental apartments was given by q = 14 + 3p and the long-run demand function was given by q = 260 - 4p, where p is the rental rate in crowns per week. The authorities made it illegal to rent an apartment for more than 30 crowns per week. To avoid a housing shortage, the authorities agreed to pay landlords enough of a subsidy to make supply equal to demand. How much would the weekly subsidy per apartment have to be to eliminate excess demand at the ceiling price?

• A) 9 crowns
• B) 24 crowns
• C) 12 crowns
• D) 6 crowns
• E) 18 crowns

---

Definitions:

Production Techniques

Methods and processes used in the transformation of inputs into outputs or goods and services.

New Approaches

Innovative or alternative methods and strategies introduced to address issues or improve existing processes.

Standard of Living

The measure of affluence, convenience, tangible assets, and basic needs present for a particular economic group or location.

Labor Productivity

A gauge of economic productivity that determines the output of goods and services for every hour worked.