Suppose that we are in a real estate market where the luxury…
Suppose that we are in a real estate market where the luxury homes being sold are vacation homes where people use them for 1 month out of the year. Suppose that one vacation home is selling for $500,000 and another is selling for $5,000,000. Answer the following questions: Which luxury vacation home should have the greater price elasticity of demand? If we are comparing the non-vacation home real estate market versus the vacation home real estate market, which real estate market should have the greater price elasticity of demand?
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