News Analysis - Vacancies and Unemployment 2. Analyzing occupancy rates Aa Aa Bi
ID: 1211022 • Letter: N
Question
News Analysis - Vacancies and Unemployment
2. Analyzing occupancy rates Aa Aa Bill, an economics student, says, "This article makes no economic sense. It quotes someone as saying that the price of apartments will go up if jobs pick up in Santa Clara. But 5% of the apartments are sitting empty. Prices should go down when there is a surplus like this one." Sara, the graduate teaching assistant for Bill's section, tries to explain to him why he might be wrong. (You have to answer her questions for him.) Sara starts by asking Bill to picture a city with 100,000 apartments, so an occupancy rate of 95% means that 95,000 apartments are occupied and 5,000 are empty. "Now suppose," she goes on, "that 1% of all the apartment dwellers move out each day. How many apartments will become vacant each day?" O 950 O 1,200 O 500 O 860 O 740 "Imagine," Sara continues, "that a few empty apartments have new people move in on the very same day that the old occupants move out. Others take longer. After all, even if lots of people are looking for apartments, it takes a few days for new tenants to come see one that has just come on the market because most people don't search every day "Let's assume that 19% of all the open apartments get new occupants each day. This means that on average, an apartment is empty for a bit more than 5 days "So if there are 5,000 empty apartments, then how many apartments get new occupants each day?" O 950 O 500 O 1,200 O 860 O 740Explanation / Answer
1. 950
2. 950
3. $500 per month
4 vacancy rate = 2%
5. True
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