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

Income elasticity of demand — practice question

The Chinese government eased restrictions on private house ownership. As a result, private house ownership increased quickly, taking the place of demand for apartments rented from the state. What was most likely to happen 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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