Waterfront homes have an inelastic supply and electric scooters have an elastic supply. Suppose that a rise in population doubles the demand for both products. a) Graph the scenario for waterfront homes. Graph the scenario for electric scooters. See attached documents for graphs. What happens to the equilibrium price and quantity in each market? Response: In each of these cases the equilibrium prices go up, quantity in the scooters goes up, and the waterfront homes quantity does not change. b) Which product experiences a larger change in price? Waterfront homes Why? There is an abundance in the demand at the initial price so then this increases the price of waterfront homes. Explain the role of elasticity in the change. c) Which product experiences a larger change in quantity? Electric Scooters Why? Electric Scooters are an inelastic product. Explain the role of elasticity in the change. d) What happens to total consumer spending on each product? As the price and quantity goes up for electric scooters so does consumer spending.
Waterfront homes have an inelastic supply and electric scooters have an elastic supply. Suppose that a
rise in population doubles the
Graph the scenario for electric scooters. See attached documents for graphs. What happens to the
equilibrium
up, quantity in the scooters goes up, and the waterfront homes quantity does not change. b) Which
product experiences a larger change in price? Waterfront homes Why? There is an abundance in the
demand at the initial price so then this increases the price of waterfront homes. Explain the role of
elasticity in the change. c) Which product experiences a larger change in quantity? Electric Scooters
Why? Electric Scooters are an inelastic product. Explain the role of elasticity in the change. d) What
happens to total consumer spending on each product? As the price and quantity goes up for electric
scooters so does consumer spending.
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