Assume that the graphs show a competitive market for the product stated in the question. Select the graph above that best shows the change in the market speciﬁed in the following
Situation: the market for houses, when consumers experience a substantial fall in income due to a
Serious economic recession.

Question

Assume that the graphs show a competitive market for the product stated in the question.  Select the graph above that best shows the change in the market speciﬁed in the following
Situation: the market for houses, when consumers experience a substantial fall in income due to a
Serious economic recession.

Quizplus · Accepted Answer

In a competitive market for houses, a substantial fall in income for consumers due to a serious economic recession would lead to a decrease in demand for houses. This would shift the demand curve to the left, as shown in Graph B. Graph A and Graph C show a shift in supply, which is not relevant to the given situation. Graph D shows a shift in demand due to a change in tastes and preferences, which is also not relevant to the given situation.

Assume That the Graphs Show a Competitive Market for the Product