What Determines the Price and Volume of Houses in Bishops Stortford and What Does the Future Hold? Centre name: The Bishops Stortford High School The problem that will be investigated in this coursework is the problem of what determines the price and volume of sales of a detached (semi detached, terraced) house or flat in Bishops Stortford and what are the prospects for house prices and sales in the future. I am looking into this problem because it will help me personally because I, myself, might need to find a house that I can afford to buy in the future.Theories The economic theories that will help analyse the problem will be the theories of Price, Demand and Supply, Price elasticity of supply, Income elasticity of demand and Cross elasticity of demand. DefinitionsPrice: The cost of a good or service to a buyer. Cross elasticity of demand measures the responsiveness of quantity demanded of one product to the change in price of another product, the exact formula for cross elasticity for product x is:percentage change in quantity demanded of product xpercentage change in price of another productIncome elasticity of demand measures the responsiveness of quantity demanded to a change in income, the exact formula for income elasticity is:percentage change in quantity demandedpercentage change in incomePrice elasticity of supply is the relationship between change in quantity supplied and a change in price. The exact formula for price elasticity of supply is:percentage change in quantity suppliedpercentage change in priceDemand: The quantity that a buyer is willing and able to buy over a period of time. For normal goods there is an inverse relationship between quantity demanded and the good's own price. Supply: The quantity of a commodity that is offered for sale at a price over a period of time. There is usually a positive relationship between supply and price. See also price elasticity of supply. The diagram below shows a general...
