Economics 9708 · AS & A Level · Income elasticity of demand

Income elasticity of demand — practice question

When the Chinese government eased restrictions on private house ownership, private house ownership increased rapidly and took the place of demand for apartments rented from the state. What would most likely have happened to private house prices and the rents of apartments?

  • Aprivate house prices decrease / apartment rents decrease
  • Bprivate house prices decrease / apartment rents increase
  • Cprivate house prices increase / apartment rents decrease
  • Dprivate house prices increase / apartment rents increase

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