In a Crowded City Far Away, the Civic Authorities Decided

In a crowded city far away, the civic authorities decided that rents were too high. The long-run supply function of two-room rental apartments was given by q = 14 + 3p and the long-run demand function was given by q = 260 - 4p, where p is the rental rate in crowns per week. The authorities made it illegal to rent an apartment for more than 30 crowns per week. To avoid a housing shortage, the authorities agreed to pay landlords enough of a subsidy to make supply equal to demand. How much would the weekly subsidy per apartment have to be to eliminate excess demand at the ceiling price?

A) 9 crowns
B) 24 crowns
C) 12 crowns
D) 6 crowns
E) 18 crowns

Correct Answer:

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