View the step-by-step solution to:


2. The Department of Housing and Urban Development (HUD) has used housing subsidies as one of its principal tools

for guaranteeing adequate housing for low-income families. An economist at HUD estimates that a 20 percent drop in the price of housing will stimulate an increase in demand for low-cost housing approximately by 12 percent in 2003. With this information, calculate the price elasticity for low-cost housing, and interpret this number for a non-economist.

Suppose the President has set a target of increasing low-cost housing consumption by 35 percent (compared to 10 million). Based on the price elasticity you calculated above, what percent drop in price is required to meet this goal? (3 points

Top Answer

% drop in... View the full answer

Sign up to view the full answer

Why Join Course Hero?

Course Hero has all the homework and study help you need to succeed! We’ve got course-specific notes, study guides, and practice tests along with expert tutors.

  • -

    Study Documents

    Find the best study resources around, tagged to your specific courses. Share your own to gain free Course Hero access.

    Browse Documents
  • -

    Question & Answers

    Get one-on-one homework help from our expert tutors—available online 24/7. Ask your own questions or browse existing Q&A threads. Satisfaction guaranteed!

    Ask a Question