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Graph the demand curve for apartments given by the equation: D(p) = 100 - 2p. If...

Graph the demand curve for apartments given by the equation: D(p) = 100 - 2p. If supply is fixed at 20 apartments, what is the equilibrium price? Is this allocation Pareto efficient? In one or two sentences explain why or why not.

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Answer #1

At equilibrium demand is equal to supply

100 - 2P = 20

2P= 80

P= 40

Q= 20

This allocation is not Pareto efficient because there is a constraint on supply side. Consumers and producers will be better off without tue constraint.

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