Authors libby rittenberg 268

This is illustrated in Figure 5.10 "Increase in Apartment Rents Depends on How Responsive Supply Is" Suppose the rent for a typical apartment had been R0 and the quantity Q0 when the demand curve was D1 and the supply curve was either S1 (a supply curve in which quantity supplied is less responsive to price changes) or S2 (a supply curve in which quantity supplied is more responsive to price changes) Note that with either supply curve, equilibrium price and quantity are initially the same Now suppose that demand increases to D2, perhaps due to population growth With supply curve S1, the price (rent in this case) will rise to R1 and the quantity of apartments will rise to Q1 If, however, the supply curve had been S2, the rent would only have to rise to R2 to bring the market back to equilibrium In addition, the new equilibrium number of apartments would be higher at Q2 Supply curve S2 shows greater responsiveness of quantity supplied to price change than does supply curve S1 Figure 5.10Increase in Apartment Rents Depends on How Responsive Supply Is Attributed to Libby Rittenberg and Timothy Tregarthen Saylor URL: http://www.saylor.org/books/ Saylor.org 268