Final answer:
The percentage increase in apartment supply when the rent changes from $650 to $700 is 30%. The change in price is 7.69%, leading to a price elasticity of supply of approximately 3.90, which reflects high price sensitivity.
Step-by-step explanation:
The student has posed a question related to calculating the Price Elasticity of Supply for apartment units. To find the percentage increase in apartment supply with a rent change from $650 to $700, we first calculate the change in quantity supplied and then the change in price, and finally, we can determine the price elasticity.
The increase in supply is: 13,000 units - 10,000 units = 3,000 units. As a percentage of the original supply, this is (3,000 / 10,000) * 100% = 30%. The change in price is $700 - $650 = $50, and as a percentage of the original price, it is (50 / 650) * 100% = 7.69%.
Calculating Price Elasticity of Supply
The price elasticity of supply (PES) is determined by the formula PES = (% Change in Quantity Supplied) / (% Change in Price), which in this scenario yields: PES = 30% / 7.69% ≈ 3.90. Therefore, the price sensitivity of the supply is 3.90, indicating that for a given percent change in price, the quantity supplied will change by 3.90 times that percent change.