Author Question: As income levels rose moderately last year in the San Jose area, it was observed by local realtors ... (Read 51 times)

lb_gilbert · **on:** Jun 30, 2018

As income levels rose moderately last year in the San Jose area, it was observed by local realtors that housing sales increased substantially. It is clear from this information that, everything else held constant, the income elasticity of demand for houses is _____.
a. negative and relatively low
b. negative and relatively high
c. positive and relatively low
d. positive and relatively high
e. neither positive nor negative

Question 2

If a firm that had to pay an explicit rent of 5,000 a month bought its own building, at which point it could rent that building to another firm for 4,500 a month, it faces a lower opportunity cost of occupying the building when it owns it.
a. True
b. False
Indicate whether the statement is true or false