Students at Informed University pay $40 per year for a parking permit but many complain that they are unable to find a parking place in University lots.In terms of equilibrium, this suggests that:

Question

Quizplus · Accepted Answer

The fact that students are unable to find a parking place in University lots suggests that there is excess demand for parking spots. This means that, at the current price of $40 per year, the quantity demanded of parking permits exceeds the quantity supplied. In terms of equilibrium, the price of parking permits should increase to reach a balance between the quantity demanded and the quantity supplied. Therefore, parking permits are underpriced.

Students at Informed University Pay $40 Per Year for a Parking