Question

In: Economics

Suppose for the market for housing that both buyers and sellers expected the price to increase....

Suppose for the market for housing that both buyers and sellers expected the price to increase. Which of the following would result?

Group of answer choices

Price rises and quantity rises

Price falls and quantity is unclear

Price rises and quantity is unclear

None of the above

Solutions

Expert Solution

the buyer expectation of an increase in price increases demand which leads to increase in price and quantity both

the supplier increase in price in the future decreases supply which increases the price and decreases the quantity

so in the new equilibrium price increases and quantity is unclear

Option 3

Price rises and quantity is unclear

Rahul Sunny answered 1 year ago
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