Suppose the government decides that every family should own its own home. To bring this about, the government decides to subsidize the home-construction industry by giving the home-construction companies $10,000 for every house that they build. As a result of this,
A)the supply curve of new houses would shift leftward, since it now costs $10,000 more for builders to produce a house.
B)the demand curve for new houses would shift rightward, since now every family would want to buy a house.
C)the demand curve for new houses would shift leftward.
D)the supply curve of new houses would shift rightward, since builders would be willing to produce and sell more houses at each given price.

Question

Quizplus · Accepted Answer

The government subsidy would lower the cost for home-construction companies to produce a house, causing the supply curve of new houses to shift rightward. This is because builders would be willing to produce and sell more houses at each given price, as they are receiving a subsidy. This would likely lead to an increase in the quantity of houses supplied, potentially making it easier for families to own their own homes.

Suppose the Government Decides That Every Family Should Own Its