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 = 17 + 4p and the long-run demand function was given by q = 304 - 5p, where p is the rental rate in crowns per week.The authorities made it illegal to rent an apartment for more than 27 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) 5.50 crowns
B) 8 crowns
C) 11 crowns
D) 22 crowns
E) 16.50 crowns

Correct Answer:

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