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1 July, 08:41

Assume household income has fallen dramatically in Country X and the cost of construction materials for building new houses has increased. How will these changes affect the equilibrium price and equilibrium quantity for new houses?

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  1. 1 July, 10:26
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    The correct answer is (e)

    Explanation:

    Income has fallen which will decrease the demand for houses. Similarly, the increase in the cost of construction materials will decrease the supply of materials. The result is the left shift in the supply and demand curve. Likewise, the leftward shift in both demand and supply curve will decrease the equilibrium quantity and equilibrium price will be indeterminate.
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