discussion

Post your responses to the following questions in this discussion forum. 

1. Draw and label a graph that depicts a downward-sloping demand curve and an upward-sloping supply curve in the market for apartments. Assume that this market was in equilibrium in 2022. Attach a picture of your graph.

2. From the article: “The sting of rent inflation hit tenants hard the past two years, due in part to record demand and not enough supply. The surge in monthly rent… peaked in March 2023 at 8.8% higher than the year before…” Use the graph you drew to answer the previous question to show how an increase in demand from 2022 to March 2023 caused the equilibrium price (rent) for apartments to increase. Attach the graph.

3. The rental market is slow to move towards equilibrium due to the time it takes to build new housing. The quote in Question #2 implies there is a disequilibrium in the market. What kind of disequilibrium is implied and why?

4. From the article: “Even though rental demand is likely elevated due to tight conditions in the for-sale market, the number of new units should keep rents from increasing much, if at all…” If the net long-run effect of an increase in demand and an increase in supply for apartments results in a decrease in rents, would the increase in demand be greater or less than the increase in supply? Explain your answer.

5. Have higher rents impacted you or will they in the future? Why or why not?

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