The Income Elasticity of Demand for Housing Property Is Exactly

question 21

Multiple Choice

The income elasticity of demand for housing property is exactly 1.40.Due to a recession,you expect incomes to drop by 5% next year. How will consumers adjust their purchase for housing property?​

• A)​Buy 5% more houses
• B)Buy 5% fewer houses
• C)Buy 7% more houses
• D)​Buy 7% fewer houses

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Definitions:

Apples

A type of fruit that is cultivated worldwide and comes in various colors, including red, green, and yellow, known for its crisp texture and sweet to tart flavor.

Bananas

A common fruit known for its elongated shape and soft, starchy interior, often consumed as a snack or used in cooking.

Utility Function

A mathematical representation of how a consumer ranks different bundles of goods according to the levels of satisfaction they provide.

Marginal Rate of Substitution

The rate at which a consumer can give up some amount of one good in exchange for another good while maintaining the same level of utility.