Suppose there are five sellers and five buyers in a rental market, each willing to buy or sell one rental unit, with values of {1000,900,800,700,600}. Assuming no transactions costs and a competitive market, what is the equilibrium price in this market

$800

Explanation;

The Equilibrium price is the price where the quantity sold by buyers equals the quantity sold by sellers.

Going by the following schedule that price would be $800 because at that point Sellers are willing to sell 3 units and Buyers are willing to buy 3 units.

Price  Quantity Demanded    Quantity Sold

1,000  1  5

900  2  4

800  3  3

700  4  2

600  5  1

$18,000

Explanation:

1. Figure out the straight-line declining balance by dividing 1 by the number of years of expected life (5). 1/5= 0.20 or 20%.

2. for double-declining-balance, multiply 0.20 * 2 = 0.40

3. Find the depreciation for the first year. $50,000 * 0.40 = $20,000, then subtract $20,000 from $50,000 = $30,000

4. Do the same process for the following years. $30,000 *0.40 = S12,000, $30,000 - $12,000 = $18,000