Some economics students cite the following three factors that may cause the demand curve for houses in Calgary to shift to the right when the price of oil rises:
(1)the population in Calgary increase during oil booms;
(2)the income of individuals increase during oil booms;
(3)the price of the average house rises substantially during oil booms,but is not expected to rise further.
Which of the above factors were cited correctly?
A) Factor 1 only.
B) Factor 2 only.
C) Factor 3 only.
D) Factors 1 and 2.
E) Factors 1,2,and 3.

Question

Quizplus · Accepted Answer

Factor 1 is correct because during oil booms, the population in Calgary increases due to job opportunities in the oil industry.

Factor 2 is also correct because during oil booms, the income of individuals in Calgary increases due to higher wages and salaries in the oil industry.

Factor 3 is irrelevant to the demand curve for houses in Calgary shifting to the right because it only indicates that the price of houses has already risen during oil booms and is not expected to rise further, but it doesn't explain why demand would increase.

Therefore, the correct factors are 1 and 2.

Some Economics Students Cite the Following Three Factors That May