Chapt 2 (GB) - Garrett Barnes Chapt 2 Prob 2,4 & 8 2....

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Garrett Barnes Chapt 2 2. Why is the supply of real estate considered inelastic in the short run? What are the implications of changes in demand if supply is held fixed? The supply of real estate is considered inelastic in the short run because of the inability of the market to add real estate in the near to intermediate term. It often takes years to conceive, design, permit, and build a new property. Graphically a short-term supply curve is a vertical line at one point on the supply side. Due to the inelasticity of supply in the short run any changes in demand have a direct impact on vacancy, rents, and prices. An increase in demand instantly causes an increase/decrease in vacancy, rents, or prices. 4. List the primary attributes of real estate markets compared to perfectly competitive markets. What are the implications of each attribute on the market’s ability to respond to changes in demand?
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This note was uploaded on 09/01/2011 for the course BUSINESS 101 taught by Professor Jones during the Spring '11 term at Southern Nazarene.

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Chapt 2 (GB) - Garrett Barnes Chapt 2 Prob 2,4 & 8 2....

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