Applying neoclassical theory to the housing market,a higher marginal product of (housing)capital may be caused by ________.
A)higher expected household income
B)the inability to buy as much housing at a higher price
C)an expected increase in the relative price of housing
D)a decrease in the cost of building new houses

Question

Quizplus · Accepted Answer

A higher marginal product of capital in the housing market means that each additional unit of capital (housing) invested generates a higher return. This could be caused by higher expected household income, as households with more income are willing to pay more for housing, increasing the demand for housing and thus the marginal product of capital.

Applying Neoclassical Theory to the Housing Market,a Higher Marginal Product