Suppose that the equilibrium price and quantity of new houses both increase.Which of the following could be a cause of this change?
A) Both the supply and the demand for new houses increased, and the supply increased by more than the demand.
B) The demand for new houses increased, and the supply did not change.
C) Both the supply and demand for new houses decreased.
D) The supply of new houses decreased, and the demand for new houses did not change.
E) The supply of new houses increased, and the demand for new houses did not change.

Question

Quizplus · Accepted Answer

If the demand for new houses increase and the supply remains unchanged, then both the equilibrium price and quantity of new houses will increase. This is because the increase in demand will cause a shortage of new houses, which will lead to an increase in price and quantity. Options A, C, D and E do not accurately explain the increase in equilibrium price and quantity of new houses.

Suppose That the Equilibrium Price and Quantity of New Houses