a) The number of new apartments demanded in a city dropped from 40,000 to 37,500 as...

a) The number of new apartments demanded in a city dropped from 40,000 to 37,500 as the result of a rent increase from $1180 to $2110 per month. Calculate the price elasticity of demand for apartments. Use the midpoint formula. Are they elastic/inelastic/unit elastic?

b) When the average consumer income in a county in the UK increased from £21,000 to £22155, the number of movie tickets bought increased from 2350 to 2800 per month. Calculate the income elasticity of demand using the midpoint formula. Discuss the nature of the product.

Expert Solution

Rahul Sunny answered 7 months ago

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