1. Waterfront homes have an inelastic supply and electric scooters have an elastic supply. Suppose that a rise in population doubles the demand for both products.
a) Graph the scenario for waterfront homes. Graph the scenario for electric scooters. What happens to the equilibrium price and quantity in each market?
b) Which product experiences a larger change in price? Why? Explain the role of elasticity in the change.
c) Which product experiences a larger change in quantity? Why? Explain the role of elasticity in the change.
d) What happens to total consumer spending on each product?