After the September 11, 2001 attacks on the World Trade Center, the supply of downtown office space in Manhattan was dramatically reduced. Forecasters predicted that the equilibrium price would rise, but in fact the price fell. What are some factors that could explain the fall in the equilibrium price, which the forecasters failed to take into account?
A) Demand for office space fell due to quality-of-life concerns.
B) The economic slowdown caused demand for office space to fall.
C) both A and B
D) none of the above

Question

Quizplus · Accepted Answer

Both A and B contributed to the fall in the equilibrium price. Demand for office space fell due to quality-of-life concerns, as some companies and workers did not want to be located in downtown Manhattan after the attacks. Additionally, the economic slowdown that followed the attacks caused a decrease in demand for office space, as businesses cut back on their operations and expansion plans.

After the September 11, 2001 Attacks on the World Trade