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Suppose you are considering two cities, city A with elastic housing supply and city B with inelastic housing supply. The two cities are otherwise exactly identical. Suppose you believe that housing demand in both cities will rise by exactly 20% over the next 3 years. Which city should have a bigger rise in house prices at the end of the 3 years holding all else constant? OA. There is not enough information to answer this question OB. City B OC. Both cities expect the same rise in house prices D. City A

Suppose you are considering two cities, city A with elastic housing supply and city B with inelastic housing supply. The two cities are otherwise exactly identical. Suppose you believe that housing demand in both cities will rise by exactly 20% over the next 3 years. Which city should have a bigger rise in house prices at the end of the 3 years holding all else constant? OA. There is not enough information to answer this question OB. City B OC. Both cities expect the same rise in house prices D. City A

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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QUESTION 6 Suppose you are considering two cities, city A with elastic housing supply and city B with inelastic housing supply. The two cities are otherwise exactly identical. Suppose you believe that housing demand in both cities will rise by exactly 20% over the next 3 years. Which city should have a bigger rise in house prices at the end of the 3 years holding all else constant? OA. There is not enough information to answer this question OB. City B OC. Both cities expect the same rise in house prices OD. City A
Transcribed Image Text:QUESTION 6 Suppose you are considering two cities, city A with elastic housing supply and city B with inelastic housing supply. The two cities are otherwise exactly identical. Suppose you believe that housing demand in both cities will rise by exactly 20% over the next 3 years. Which city should have a bigger rise in house prices at the end of the 3 years holding all else constant? OA. There is not enough information to answer this question OB. City B OC. Both cities expect the same rise in house prices OD. City A
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