Assume that there has been an increase in the marginal productivity of construction workers building new housing. How might this affect the market for new housing?
A) Demand for new housing will rise, leading to an increase in the equilibrium price and quantity of new housing.
B) Supply of new housing will rise, leading to an increase in the equilibrium quantity and decrease in the price of new housing.
C) Demand for new housing will fall, leading to a decrease in the equilibrium price and quantity of new housing.
D) Supply of new housing will fall, leading to an increase in the equilibrium price and decrease in the quantity of new housing.

Question

Quizplus · Accepted Answer

An increase in the marginal productivity of construction workers means they can build houses more efficiently, which increases the supply of new housing. This leads to a higher equilibrium quantity and a lower price, as it becomes cheaper to produce houses.

Assume That There Has Been an Increase in the Marginal