b.
If the present rental rate of one-bedroom apartments is $1,000 per month, through what mechanism will the rental rate adjust to the equilibrium rental rate of $800?
Part 4
A.
Since the price is below equilibrium, the shortage of apartments will cause the quantity supplied to rise and the quantity demanded to fall.
B.
Since the price is above equilibrium, the surplus of apartments will cause the quantity supplied to fall and the quantity demanded to rise.
C.
Since the price is below equilibrium, the surplus of apartments will cause the quantity supplied to rise and the quantity demanded to fall.
D.
Since the price is above equilibrium, the shortage of apartments will cause the quantity supplied to fall
and the quantity demanded to rise.
mutiple choice answer A, B, C or D
C. Since the price is below equilibrium, the surplus of apartments will cause the quantity supplied to rise and the quantity demanded to fall.
the present rental rate is $1000 but the equilibrium rental rate of $800
D. Since the price is above equilibrium, the shortage of apartments will cause the quantity supplied to fall and the quantity demanded to rise.
There will be forces pushing the price back down toward $800 per unit: Competing suppliers will cut prices and reduce output, and consumers will purchase more at these new lower prices. If the two forces of supply and demand are unrestricted, they will bring the price back to $800 per unit.
Based on the explanation given, the correct answer would be: D. Since the price is above equilibrium, the shortage of apartments will cause the quantity supplied to fall and the quantity demanded to rise.
wwrong answer
I apologize for the confusion. The correct answer would be:
A. Since the price is below equilibrium, the shortage of apartments will cause the quantity supplied to rise and the quantity demanded to fall.
When the rental rate is above equilibrium (in this case, $1,000), there will be a surplus of apartments available. As a result, landlords will be incentivized to lower their rental prices in order to attract more tenants and fill the vacant apartments. This increase in the quantity supplied and decrease in the quantity demanded will eventually push the rental rate towards the equilibrium rate of $800.