Answer to Question #126732 in Microeconomics for Prince Yaw Anagli

Question

Assume a certain area of UENR Campus has been specifically designed to provide hostel accommodation facilities for students from low income homes. The students who stay in the area tend to stay there because they cannot afford to live in other hostel facilities on Campus, they prefer to live with students they pursue the same programme with, or there is discrimination against them in other hostel facilities on Campus Rents paid are a very high percentage of the students' income. Given the above

Would the demand for hostel accommodation in this area of the University be relatively inelastic or elastic? Explain why,

Would the supply of hostel accommodation in this area of the University be relatively inelastic or elastic? Explain why

Answer 1

The demand for hostel accommodation the area will be relatively inelastic since even if the rent is very high the students will still require accommodation thus will occupy the hostel facilities.

The supply of hostel accommodation in the area will be relatively elastic since as the rent paid increases the supply of the hostels will tend to increase.