In a Crowded City Far Away, the Civic Authorities Decided

question 10

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 = 20 + 5p and the long-run demand function was given by q = 271 - 2p, where p is the rental rate in crowns per week. The authorities made it illegal to rent an apartment for more than 23 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) 18 crowns
• C) 36 crowns
• D) 15 crowns
• E) 27 crowns

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Definitions:

Corporation

A legal entity created under state law that is separate from its shareholders and has its own rights and liabilities.

National

Pertaining to or characteristic of a nation; relating to a country or its citizens.

Community Service

Voluntary work intended to help people in a particular area, often organized through groups, schools, or non-profit organizations to support the community.

Altruism

An unselfish interest in helping another person.