ECO1104B: Introduction to microeconomics

ECO1104B: Introduction to microeconomics
Formal assignment II
Fall 2015
Due in class on Tuesday, 8 December
You will be graded for the quality and accuracy of your answers and presentation of your results. Make sure that your assignment is presented consistently from page to page (e.g., same font and font size).
USE the cover page, available from the Web site on the Assignment page.
Hand in your assignment on 8.5 in. x 11 in. single sided sheets of paper.
The assignment should be produced as an MS Word document. Copy and paste all tables and charts from your Excel sheet to this document.
Always keep a back-up copy and photocopy of your document.
Staple the pages of your assignment together.
1. A price ceiling, consumer surplus, and producer surplus (designed to accommodate chapter 7)
a. Using the following equations, generate a table in Excel to show the market for apartments in a large city where the local government has imposed rent control. Using quantity values ranging from 0 to 240 (increasing at 5 unit increments), calculate the corresponding price based on the demand for apartments equation: P = 1200 – 5Qd, and the corresponding price based on the supply of apartments equation: P = 300 + 5Qs. Copy and paste this table in your main MS Word document.
b. Construct a chart showing the demand curve, the supply curve, and a price ceiling of $ 700. Label them D, S, and Ceiling. Copy and paste this chart in your Word document.
c. In the absence of rent control, what would be the equilibrium rent Compute your answer algebraically. Does this answer agree with the equilibrium in the table
d. With the rent control ceiling, how many units are being rented Is there a shortage or surplus of apartments If yes, by how many Derive all your answers algebraically.