Answer to Question #127499 in Microeconomics for Rohan

Question

1. Has alternative housing been responsible for changes in Demand and Supply Elasticities?

Answer 1

Has alternative housing been responsible for changes in Demand and Supply Elasticities?

Answer Yes

Elasticity of demand can be defined as a degree of receptiveness of consumers to change in product cost. On the other hand, elasticity of supply is the percentage change in quantity supplied divided by the percentage change in price.

Alternative housing has been responsible for changes in demand and supply elasticity. The general affordability of alternative housing has reduced the demand for buying houses, which has led to high supply than demand, thus reducing the price of houses. 

Over time, this has led to a high demand for houses since more and more people can now afford to purchase houses due to low prices. It is important to note that a change in one factor leads to a change in other factors. Thus this is not a permanent situation but keeps changing until an equilibrium is achieved