Supply and Demand - End of Chapter Problem Two students are debating the effects of an expected decline in future home prices. Student 1 claims that a decline in home prices will increase the total quantity of homes bought and sold while student 2 claims that the quantity of homes bought and sold will decline. a. Which student is correct? Without knowing the magnitude of the shifts, we cannot tell whether equilibrium quantity increases or decreases. No one is correct. Student 2 is correct. Student 1 is correct. b. What do we know will happen without ambiguity? Supply will decrease once expectations are announced. Demand will increase once expectations are announced. Equilibrium price will decrease. Equilibrium quantity will increase.

Supply and Demand - End of Chapter Problem Two students are debating the effects of an expected decline in future home prices. Student 1 claims that a decline in home prices will increase the total quantity of homes bought and sold while student 2 claims that the quantity of homes bought and sold will decline. a. Which student is correct? Without knowing the magnitude of the shifts, we cannot tell whether equilibrium quantity increases or decreases. No one is correct. Student 2 is correct. Student 1 is correct. b. What do we know will happen without ambiguity? Supply will decrease once expectations are announced. Demand will increase once expectations are announced. Equilibrium price will decrease. Equilibrium quantity will increase.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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