In the 1990s,many people had rising incomes.At the same time,there was a rise in the cost of lumber.This would cause the demand for houses to _________ and the supply for houses to_________.
A)Increase,increase
B)Increase,decrease
C)Decrease,increase
D)Decrease,decrease

Question

​In the 1990s,many people had rising incomes.At the same time,there was a rise in the cost of lumber.This would cause the demand for houses to _________ and the supply for houses to_________.
A)​Increase,increase
B)Increase,decrease
C)Decrease,increase
D)​Decrease,decrease

Quizplus · Accepted Answer

If there is a rise in the cost of lumber, the cost of building a house increases. As a result, the supply of houses would decrease as the cost to produce each house has gone up. However, people still have rising incomes and may be willing to pay more for a house, leading to an increase in demand. Therefore, the demand for houses would increase while the supply for houses would decrease.

​In the 1990s,many People Had Rising Incomes

In the 1990s,many People Had Rising Incomes