Economics: Principles, Problems, and Policies, 19th Edition

Published by McGraw-Hill Education
ISBN 10: 0073511447
ISBN 13: 978-0-07351-144-3

Chapter 4 - Elasticity - Questions: 4

Answer

The demand would become inelastic than before and the room rates will go up.

Work Step by Step

When the university dormitories become a necessity for university students, their demand for them will become inelastic and the students who wish to study in university will have a perfectly inelastic demand curve. This will also increase the room rates because with inelastic demand, increase in price results in increase in revenue.
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