Question

The average price of homes in the Washington DC Area has increased from around $100,000 in 1987 to over $400,000 by 2017. Describe how supply and demand, which was covered in lesson 3, can explain the rise in prices (which curve is changing and in which direction). Explain, using the basic tenants of economics that were covered in lesson 1, how the higher prices of home might affect your decision to take a job in Washington DC if you were offered one. Finally, describe what kind of resources are used to build houses and how are the costs of these resources change over time.

Answer 1

Ans

Here either supply curve is shifting leftwards and/or demand curve is shifting rightwards. However more likely it is due to increase in demand as with the passage of time demand for housing rises.

I will not most likely accept since I can work elsewhere where I will have to spend less on rent and thus I will have higher Savings.

Sanz, wood, iron, Almunium sheets, bricks, cement, labour etc are required. Due to inflation prices of these goods tend to rise withvtine