Suppose the market for standard one-family houses in a Canadian city is described by the equations...
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Suppose the market for standard one-family houses in a Canadian city is described by the equations Qd (165+IM)-2.5P, and Qs=-60+10P, where Q represents the number of houses demanded or supplied per year (in 10s), P represents the price in 10 000s, and IM is the number of families immigrating into the city during the year, in 10s. /13 a) What is the equilibrium number of houses and the equilibrium price if there were no immigration (IM=0)? Show this situation in a graph. Now, suppose 35 families have immigrated within the year (IM=35). b) Show this new situation on your graph. c) What are the new equilibrium price and number of houses? d) How many of the "old" families (non-immigrant) have lost their ability to buy a house? e) By how much does the number of houses supplied increase? f) How many of the newcomers buy a house? How could you change the demand equation if you knew that only about 10 percent of the immigrating families buy a house in the year of their arrival? Suppose the market for standard one-family houses in a Canadian city is described by the equations Qd (165+IM)-2.5P, and Qs=-60+10P, where Q represents the number of houses demanded or supplied per year (in 10s), P represents the price in 10 000s, and IM is the number of families immigrating into the city during the year, in 10s. /13 a) What is the equilibrium number of houses and the equilibrium price if there were no immigration (IM=0)? Show this situation in a graph. Now, suppose 35 families have immigrated within the year (IM=35). b) Show this new situation on your graph. c) What are the new equilibrium price and number of houses? d) How many of the "old" families (non-immigrant) have lost their ability to buy a house? e) By how much does the number of houses supplied increase? f) How many of the newcomers buy a house? How could you change the demand equation if you knew that only about 10 percent of the immigrating families buy a house in the year of their arrival?
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a When there is no immigration IM 0 the demand and supply equations become Qd 165 25P Qs 60 10P To f... View the full answer
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