equilibrium price and elasticity

timer Asked: Sep 29th, 2014

Question description

Consider a college town where the initial equilibrium price is of an apartment is $400 and the initial equilibrium quantity is 1,000 apartments. Th price elasticity of demand for apartment is 1.0 and the elasticity of supply is 0.50. Suppose the demand for apartments increases by 15%. Does the new equilibrium price of the apartments increase or decrease? and by how much %? thanks

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