Question

David wants to rent an unfurnished apartment for next semester. He took a random sample of 9 apartments advertised in the local Halifax paper, and recorded the rental rates. The rents (in $ per month) were:

Rental Rates
500 650 600 505 450 550 515 495 640

Answer 1

To calculate the percentage increase in supply of apartments, we subtract the initial supply from the new supply and divide by the initial supply, resulting in a 30% increase. For the price elasticity of supply, we divide the percentage change in quantity supplied by the percentage change in price, yielding a price sensitivity of about 3.90.

Step-by-step explanation:

The question involves calculating the percentage increase in the supply of apartments and the price sensitivity known as the price elasticity of supply. To calculate the percentage increase in supply, we use the formula (new quantity - initial quantity) / initial quantity. In this case, it is (13,000 - 10,000) / 10,000, which gives 0.3 or 30%. To find the price elasticity of supply, we use the formula (percentage change in quantity supplied) / (percentage change in price). The percentage change in price is calculated by (new price - initial price) / initial price, which is ($700 - $650) / $650, leading to a percentage change in price of approximately 7.69%. Therefore, the price elasticity of supply is 30% / 7.69%, resulting in a price sensitivity of approximately 3.90.

Answer 2

The rental rates that David recorded are:

500, 650, 600, 505, 450, 550, 515, 495, 640

So the rents (in $ per month) were:

$500/month

$650/month

$600/month

$505/month

$450/month

$550/month

$515/month

$495/month

$640/month