Suppose the equilibrium price and quantity of new houses both increase. Which of the following could be a cause of this change?

Question

Quizplus · Accepted Answer

If more home buyers move into the area, then there is an increase in demand for new houses, which will result in an increase in equilibrium price and quantity. A technological advance, falling cost of wood framing, or a decrease in rent for nearby apartments would shift the supply curve, but it is unclear in which direction. An increase in the wage paid to carpenters would increase the cost of production and shift the supply curve leftward. Therefore, the only plausible cause of the increase in equilibrium price and quantity is an increase in demand, which can be explained by more home buyers moving into the area.

Suppose the Equilibrium Price and Quantity of New Houses Both