A newspaper reports that in an urban area the average price of new homes has decreased,...
A newspaper reports that in an urban area the average price of new homes has decreased, but the number of new homes sold has increased. This situation would best be explained by:
a. decrease in demand
b. increase in supply
c. decrease in supply
d. increase in demand
Homework Answers
Ans.- increase in supply
When the supply of new homes increases ,the supply curve shifts the right. As a result, equilibrium price falls but the equilibrium quantity increases. So, the average price of new homes has decreased, but the number of new homes sold has increased
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