The equations below can be used to analyze the apartment rental market of Detroit, Michigan. The...

The equations below can be used to analyze the apartment rental market of Detroit, Michigan. The city of Detroit has hired you as a consultant to compare two polices aimed at reducing the cost of housing.

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e) Suppose that the government decides to replace the subsidy with a price control. The government sets a price ceiling of $860 dollars in the apartment rental market. Calculate the number of apartments that will be rented under the new policy and show graphically.

f) How many people will lose an apartment?

g) Calculate the change in social welfare under the new policy.

h) Write a small paragraph comparing the two government policies. Which would you support and why?

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Expert Solution

Rahul Sunny answered 1 year ago

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