Question: Kenny McCormick manages a 100 unit apartment building and knows from

Kenny McCormick manages a 100-unit apartment building and knows from experience that all units will be occupied if rent is $900 per month. McCormick also knows that, on average, one additional unit will go unoccupied for each $10 increase in the monthly rental rate.
A. Estimate the apartment rental demand curve assuming that it is linear and that price is expressed as a function of output.
B. Calculate the revenue-maximizing apartment rental rate. How much are these maximum revenues?
C. If all costs are fixed, what is the profit-maximizing number of vacant apartments? Explain your answer.

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  • CreatedFebruary 13, 2015
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