You Own an Apartment Complex, and You Want to Increase

question 104

Multiple Choice

You own an apartment complex, and you want to increase the monthly rent on all units by $50 a month. When you ask the building's on-site manager, Janette, whether she thinks it's okay to raise the rent, she says that demand for rental housing is elastic. What is she saying you should do?

• A) People are sensitive to price changes on big-ticket items such as housing, so you should be prepared for a drop in demand if you raise the rent.
• B) People are more tolerant of price changes on big-ticket items such as housing, so it's okay to raise the rent. You won't see a change in demand.
• C) People won't be able to find a close substitute to your apartments, so they'll have to absorb the price increase when you implement it.
• D) Housing is perceived as a necessity, so a change in price will have relatively little effect on demand. Raising the rent will have no repercussions.

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Definitions:

PROM

Programmable Read-Only Memory; a type of digital memory that is programmed after the manufacturing process and cannot typically be reprogrammed or erased.

EEPROM

Electrically Erasable Programmable Read-Only Memory, a type of non-volatile memory used in computers and other devices for storing data.

Personality Module

An electronic module that contains software or firmware to provide specific characteristics or functions to a system, often customizable.