USF issues parking permits to allow students to park on campus. The price of the permit is set by college administrators at their discretion; they do not consider market conditions. At the current price, some students complain that there aren’t enough spaces for them to park.
Address the following three points in a short essay:
Describe this situation in economic terms and describe what this implies about the market equilibrium and the price of a parking permit.
Should the price of a parking permit be raised or lowered to fix this problem? Why? Explain.
Use the supply and demand model to describe how a graph of the market for parking permits would be affected by a change in price. You must include a graph and reference/describe the graph in your essay.
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