In a Crowded City Far Away, the Civic Authorities Decided

question 26

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 + 5p, and the long-run demand function was given by q = 329 - 5p, where p is the rental rate in crowns per week.The authorities made it illegal to rent an apartment for more than 25 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)6.50 crowns
• B)10 crowns
• C)13 crowns
• D)26 crowns
• E)19.50 crowns

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