Suppose the market for standard one-family houses in a Canadian city is described by the equations Qd=(165+IM)-2.5P, and Qs=-60+10P, where Q represents the number of houses demanded or supplied per year (in 10s), P represents the price in 10,000s, and IM is the number of families immigrating into the city during the year, in 10s.
What is the equilibrium number of houses and the equilibrium price if there were no immigration (IM=0)? Show this situation in a graph. Now, suppose 350 families have immigrated within the year (IM=35). Graph your answer.
What are the new equilibrium price and number of houses?
How many of the “old” families (non-immigrant) have lost their ability to buy a house?
By how much does the number of houses supplied increase?